ECB leaves interest rates unchanged for 16th straight month

02 September 2010 14:40  [Source: ICIS news]

LONDON (ICIS news)--The European Central Bank (ECB) left interest rates for the 16-nation eurozone unchanged on Thursday at the record low level of 1.0% for the 16th straight month, as a still-uncertain global outlook remains.

The bank had cut its key rate several times from the October 2008 level of 4.25% as it tried to take Europe's economy out of deep recession. The interest rate has remained at 1% since May 2009.

“Looking ahead, the recovery should proceed at a moderate pace, with uncertainty still prevailing, said ECB president Jean-Claude Trichet, at a monthly news conference after the announcement was made.

"Recent data and survey evidence generally confirm the expectation of a moderation in the second half of this year, both at the global level and in the euro area. Nevertheless, while uncertainty still prevails, they continue to indicate a positive underlying momentum of the recovery in the euro area," Trichet added.

Additionally, Trichet said the governing council had decided to continue its lending policy to vulnerable euro zone banks, and committed to provide unlimited one-week and one-month funding for as long as necessary or until at least 18 January 2011.

The bank would also offer unlimited funds at its three-month fixed-rate tender operations in October, November and December until at least the end of this year, Trichet added.

In August, statistics agency Eurostat announced that gross domestic product (GDP) in the second quarter of 2010 had increased by 1% in both the eurozone and in the 27-member European Union (EU), adding that in the first quarter, growth rates were 0.2% in both zones.

($1 = €0.78)

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By: Franco Capaldo
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