ECB holds rates and expands bond programme
As expected, the European Central Bank (ECB) today elected to keep interest rates on hold at the record low of 1% for the 19th consecutive month.
There were suggestions that the bank might have taken drastic action in order to address the debt crisis, currently engulfing the euro zone.
However, the ECB said it will continue with its programme of buying Government bonds, but no amounts were disclosed.
ECB head Jean-Claude Trichet said: “The programme is ongoing,” after today‘s meeting adding: “It’s not Quantitative Easing, we are absorbing all the liquidity.”
To date, the ECB has purchased €67 billion of Government bonds from the commercial banks following the introduction of the scheme in May 2009.
Returning to the debt crisis, Ireland will be the recipient of an €85 billion bailout package but this has done little to reassure the markets and yields on bonds issued by Spain, Portugal, Italy and Belgium continue to rise.