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 14th 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 17th consecutive month that rates have been at this level.

Commenting on the ECB’s decision, president Jean-Claude Trichet said: “We expect the [area's] economy to grow at a moderate and still uneven pace, in an environment of high uncertainty”.

There has been concern over recent weeks that euro zone banks have become dependent on ECB funds and stress tests are intended to ease increasing anxiety over Europe’s finance sector.

Stress tests by the London-based Committee of European Banking Supervisors (CEBS) and national bank regulators are to be published later this month.

In related news today, the International Monetary Fund (IMF) lifted its 2010 global growth forecast and expects the euro zone to see growth of 1%.

However, the Fund warned that ongoing financial turmoil in the euro zone, triggered by Greece’s debt crisis, threatened to spread across the region.

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