Euro zone interest rates on hold at 1%

| September 3, 2009 | 0 Comments

For the fourth 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%.

Germany and France, Europe’s largest economies have both emerged from recession after experiencing positive growth in the second quarter.

It also emerged today that a rise has been reported in economic activity, according to the latest Purchasing Managers’ Index (PMI).

The PMI rose to 50.4 in August - any figure above 50 represents growth and is the first time since May 2008 that the reading has been above the crucial 50 mark.

The PMI figures have raised hopes that the euro zone could emerge from recession in the third quarter.

However, a slight dip in retail sales has been reported in the euro zone for July said Eurostat.

According to Eurostat, retail sales in July fell 0.2% compared with June, dragged down by lower sales of food and drinks. Meanwhile, retail sales fell 1.8% on an annual basis.

In other news this week, it was reported that unemployment levels across the 16 countries that use the euro reached a 10-year high in July.

Official figures show that the number of people unemployed across the region reached just over 15 million people in July and puts the unemployment rate at 9.5% - the highest rate in over a decade.

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