Euro zone interest rates on hold at 1%

| August 5, 2010 | 0 Comments
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The European Central Bank (ECB) today elected to keep interest rates on hold at the historic low of 1% for the 15th 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 18th consecutive month that rates have been at this level.

Commenting on the ECB’s decision, president Jean-Claude Trichet said: “We are now … in a situation which is obviously better than before.

“We continue to expect the euro area economy to grow at a moderate and still uneven rate.”

However, he added: “I don’t declare victory, we remain cautious.”

The decision by the ECB comes as the International Monetary Fund (IMF) and European Union (EU) auditors today said Greece has made “considerable progress” in dealing with its public deficit.

The IMF, EU and the ECB have visited Greece to monitor progress and after the audit mission, European Commission representative Servaas Deroose said: “Despite considerable progress in a vast array of areas, key challenges remain.”

Speaking at a joint press conference in Athens, the mission’s director Poul Thomsen added that “progress is off to a very strong start but there are pressure points, risk areas”.

In May, the EU and the IMF agreed to loan €110 billion. The three-year rescue deal comprises €80 billion from the EU, with the rest coming from the IMF.

A sum of €9 billion is due to be provided to Greece on 13 September and an official from the IMF said he was “confident” Greece would receive the next instalment.

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