ECB retains interest rates at 1%

The European Central Bank (ECB) has today elected to keep interest rates at 1% as widely expected.

In an effort to boost the struggling economy, the ECB has cut rates seven times since October when rates stood at 4.25%.

Elsewhere in Europe, Sweden lowered interest rates to 0.25% - the lowest level since records began over 100 years ago.

Meanwhile, Iceland opted to keep interest rates unchanged at 12%.

Returning to the euro zone, the Eurostat agency revealed earlier today that the unemployment rate rose from 9.3% in April to 9.5% in May - the highest rate since 1999.

Economists had forecast a rise to 9.4%.

According to Eurostat, 15 million people were out of work in May, up by 273,000 from the previous month.

Meanwhile, there are fears for the euro zone after figures earlier this week revealed that the area is heading for a period of deflation.

A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters consumers and businesses from spending in expectation of falling prices.

Eurostat said inflation in the 16 countries using the euro turned negative in June for the first time since the single currency was introduced over a decade ago.

Prices in the euro zone fell 0.1% over the last 12 months - the inflation rate had been 0% in May.

The ECB‘s target rate for inflation is just under 2%.

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