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Saturday 22nd of May 2010
October 8, 2009    

Euro zone interest rates unchanged as widely expected

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by Kay Murchie
Euro zone interest rates unchanged as widely expected

The European Central Bank (ECB) has today elected to keep interest rates for the euro zone on hold at the record low of 1%, as widely expected.

The move comes as policymakers are uncertain about recovery within the region after official figures earlier this week revealed that the economy contracted by 0.2% in the April to June period - revised from the 0.1% previously reported.

The figures are a major setback to the economy suggesting that the economy, as a whole, may not be exiting recession in the third quarter as hoped.

Europe’s no.1 and no.2 economies, Germany and France, have already exited recession after experiencing positive growth in the second quarter.

However, following the interest rate decision, Jean-Claude Trichet president of the ECB said the euro zone economy has seen the worst of the recession and is “out of freefall”.

However, Mr Trichet warned that “uncertainty remains high”.

The news comes after the Bank of England also opted to keep interest rates on hold at the record low of 0.5%, as it too is cautious about recovery prospects following a week of mixed economic data.

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