ECB and BOE keep interest rate steady
By Pan Pylas |
February 5, 2010, Friday
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Print Edition
Print Edition
THE European Central Bank yesterday left its benchmark interest rate unchanged at 1 percent for the ninth month running while the Bank of England called a halt to its policy of pumping money into the British economy.
In a statement, the ECB's president Jean-Claude Trichet said that price developments remain "subdued" and that inflation expectations were "firmly anchored" around the its target of "close to, but below 2 percent."
Trichet also said the eurozone economy continued to expand at the start of the year but warned that the recovery would be "uneven" and "uncertain."
The central bank to the 16 countries that use the euro has kept its benchmark rate unchanged since May 2009 to boost patchy growth in the wake of the global financial crisis.
Earlier, the Bank of England kept its main interest rate unchanged at the record low of 0.5 percent and said it would not ask the government for the authority to pump more newly created money into the barely recovering British economy.
Its rate-setting Monetary Policy Committee voted to keep its asset purchase program unchanged at 200 billion pounds (US$317 billion) but that it will continue to monitor the scale of the program and could ask the government to make further purchases.
Trichet will most likely be quizzed about the debt crisis afflicting Greece and concerns that it will spread to other euro countries such as Portugal and Spain. The government debt woes have undermined the euro currency, and raised speculation that EU members might have to fund a bailout, although Greek and EU officials say that won't be needed.
Investors will be particularly interested to see whether Trichet sticks with his hard line toward Greece.
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