ECB leaves interest rates unchanged

ECB leaves interest rates unchanged

The European Central Bank (ECB) today decided to leave its key interest rate unchanged at an historic low of 1%.

The bank's Governing Council at its regular meeting in Frankfurt today "decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 1.00%, 1.75% and 0.25% respectively," a statement said.

ECB President Jean Claude Trichet in a statement to the press said the bank continued to expect price developments to remain moderate over medium term, benefiting from low domestic price pressures.

"The latest information has also confirmed that the economic recovery in the euro area continued in the first half of 2010," Mr Trichet said.

" Looking ahead, we expect the euro area economy to grow at a moderate and still uneven pace, in an environment of high uncertainty."

He said he also expected inflation to remain below 2% in the eurozone.

Mr Trichet said risks to recovery included the possibility of increased tension in financial markets, as well as the still-weak growth rate of bank loans to the private sector.

He also said the pursuit of far-reaching structural reforms is essential, especially in countries that have experienced competitiveness losses in the past or that are suffering from high fiscal and external deficits.

"Measures should ensure a wage bargaining process that allows wages to adjust flexibly to the unemployment situation and losses in competitiveness," Mr Trichet said.

"Reforms to strengthen productivity growth would further support the adjustment process of these economies."

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