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Sunday 13th of June 2010
June 10, 2010    

Euro zone interest rates on hold at 1%

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by Kay Murchie

The European Central Bank (ECB) today elected to keep interest rates on hold at the historic low of 1% for the 13th consecutive month, as widely expected.

Interest rates are expected to remain on hold until at least 2011, as a result of uneven growth and low inflation.

The news comes after the Bank of England elected to keep interest rates at the historic low of 0.5% – the 15th consecutive month that rates have been at this level.

The ECB meeting follows on from a gathering of EU finance ministers to discuss cuts in budget deficits.

ECB president, Jean-Claude Trichet, welcomed the immediate action to tackle budget deficits, describing it as “essential”.

The latest figures showed inflation in the euro zone rose 1.5% year-on-year in April, up from 1.4% the previous month.

Meanwhile, unemployment in the 16-member euro zone remains at 10%. According to Eurostat, 15.8 million people were unemployed in the euro zone during the month.

The economic downturn has hit the euro zone particularly hard and the region contracted by 4% over the whole of last year – its biggest fall since the euro was launched.

Earlier this week, it was announced that the Baltic republic of Estonia has been given the go ahead to adopt the euro on 1 January 2011 and will become the euro zone’s 17th member.

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