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October 7, 2010    

Euro zone interest rates remain on hold

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by Kay Murchie
Euro zone interest rates remain on hold

The European Central Bank (ECB) today elected to keep interest rates on hold at the historic low of 1% - where they have been since May 2009.

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 20th consecutive month that rates have been at this level.

The decision by the ECB comes as the International Monetary Fund (IMF) warned earlier this week that growth in the euro zone will be hampered by Government austerity measures.

Large deficits in many euro zone nations has led Governments to introduce tough spending cuts, but this will ultimately hit growth, said the IMF.

In related news, yesterday Eurostat revealed sales in the euro zone fell 0.4% in August on the month – raising fears about the strength of the economic recovery.

The fall represented the first since April and was weaker than analysts had forecast.

Finally, unemployment in the euro zone remains stubbornly high, with the latest figures putting the jobless rate at 10.1%.

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