European Central Bank leaves key interest rate unchanged at 0.75%

02 August 2012 12:51  [Source: ICIS news]

LONDON (ICIS)--The European Central Bank (ECB) on Thursday left its key interest rate unchanged at a record-low 0.75% amid expectations that it would take firm action to ease the eurozone debt crisis.

Prior to the announcement, ECB president Mario Draghi said he would do whatever it takes to save the euro. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” Draghi said on 26 July.

Draghi has been under mounting pressure from European leaders and investors to stimulate the struggling eurozone and its banking industry. Markets speculated the ECB would take unprecedented action to help, following concerns Spain will need a full sovereign bailout.

Last week, the International Monetary Fund (IMF) said the outlook for Spain is very difficult, noting the country's already depressed economy will contract further this year and next, and faces increasing risks. In its latest periodic review of Spain’s economy, the IMF said that the country “is facing mounting market pressure and costly market access, with possibly negative repercussions for the rest of Europe”.

On 5 July 2012, the ECB cut interest rates to a record low of 0.75%, following six straight months at 1.0%. In December, the ECB cut interest rates to 1% from 1.25%, following a fall of 25 basis points announced in November.

After October 2008, when the level was at 4.25%, the bank cut its key rate several times as it tried to haul the eurozone economy out of deep recession.

($1 = €0.82)

By: Franco Capaldo
+44 (0)20 8652 3214

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