European Central Bank continues rate freeze
by Brian Turner
As expected, the European Central Bank kept its main interest rate at 2 percent on Wednesday. This was the twenty-third straight month that the rate remained the same.
Although some members of the ECB’s governing council are believed to be in favor of raising interest rates, current economic conditions make such an action unwise at the present time.
In the eurozone growth is weak and unemployment is rising, while consumer confidence is low. At the same time, inflation rates remain under control.
Analysts believe that the weak economy will mean that interest rates will probably remain the same until at least autumn.
German’s six top economic institutes revised their growth estimates for 2005 down to 0.7 percent from an earlier estimate of 1.5 percent. The European Commission has also revised earlier 2005 growth estimates in the eurozone.
The current estimate is for 1.6 percent growth, down from 2 percent. The Commission put the blame for the revision on high oil prices and the strength of the euro.
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