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Saturday 08th of August 2009
August 6, 2009

ECB leaves interest rates unchanged for third consecutive month


by Kay Murchie
”ECB

For the third consecutive month, the European Central Bank (ECB) has elected to keep interest rates unchanged at 1%.

The last time the ECB cut rates was in May and prior to that, rates were cut seven times since October 2008 when rates stood at 4.25%.

In a further attempt to boost the struggling economy, the bank has supplied cash to the banking system and previously pledged to purchase €60 billion (£50 billion) of euro-denominated covered bonds - a less riskier type of corporate debt.

Meanwhile, ECB’s president, Jean-Claude Trichet, told reporters at his monthly news conference today: “Economic activity over the remainder of this year is likely to remain weak, although the pace of contraction is clearly slowing down.”

“We expect the current episode of extremely low or negative inflation rates to be short-lived and price stability to be maintained over the medium term,” added Mr Trichet.

The ECB’s announcement followed that from the Bank of England today who also elected to keep interest rates unchanged at 0.5%.

Finally, unemployment in the euro zone is at a record high, while retail sales were down in June.

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