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January 14, 2010    

Euro zone interest rates on hold at 1%

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by Kay Murchie
Euro zone interest rates on hold at 1%

The European Central Bank (ECB) today elected to keep interest rates on hold at the historic low of 1% for the eighth consecutive month, as widely expected.

Interest rates are expected to remain on hold for the long-term as a result of uneven growth and low inflation.

The euro zone as a whole emerged from recession in the third quarter after experiencing positive growth.

However, questions have been raised over the recovery of the euro zone, in particular Greece’s deteriorating fiscal situation.

Greece, which is the euro zone’s weakest economy, has the highest debt of the 16-member bloc.

Currently, its public debt stands at €300 billion (£268 billion).

Meanwhile, following its decision to retain interest rates at the record low of 1%, ECB President, Jean-Claude Trichet, said: “The Governing Council expects the euro area economy to grow at a moderate pace in 2010, recognising that the recovery process is likely to be uneven and that the outlook remains subject to uncertainty.

“The latest information has also confirmed that, towards the end of 2009, euro area economic activity continued to expand. However, some of the factors supporting the growth in real GDP are of a temporary nature,” he added.

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