ECB leaves rates on hold at 1 per cent (1st Lead)

Business News

Nov 5, 2009, 12:04 GMT

Frankfurt - The European Central Bank left interest rates unchanged at an historic low of 1 per cent on Thursday. The decision to keep borrowing costs on hold was in line with analysts' forecasts. The ECB governors made their announcement in Frankfurt only hours after the Bank of England (BoE) left sterling interest rates unchanged at 0.5 per cent while deciding to pump an extra 25 billion pounds (41 billion dollars) into the British economy. The economy in the 16 nations that use the euro currency has shown some signs of picking up, but economists said it was plainly too early to shift rates higher since this could choke off a recovery and there was currently very little risk of inflation. The key euro rate was cut to 1 per cent in May. Analysts have suggested the Frankfurt-based ECB may wait until the second half of next year before rates go back into climb mode. The ECB president, Jean-Claude Trichet, was set to explain the decision in the afternoon and answer questions about how long the expansive monetary policy, with billions of euros being pumped into the financial system, is likely to last. Dollar rates are also at an historic low, close to zero. The US Federal Reserve said Wednesday it was leaving them there. US economic conditions had 'continued to pick up' since its last meeting in September but were likely to 'remain weak for a time.'

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ECB leaves rates on hold at 1 per cent (1st Lead)

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