Interest rates remain steady

THE European Central Bank and the Bank of England met market expectations and held interest rates steady yesterday.

The ECB said it left the minimum bid rate at its weekly refinancing auctions

unchanged at 2.75%. The rates for marginal lending and the deposit facilities also stayed flat at 3.75% and 1.75% respectively.

Almost all economists in a Reuters poll last week had said they expected the ECB to stay put this week. But half of them said grim economic news a slump in manufacturing, which may worsen as the euro rises, weak retail sales and rising

jobless threaten recovery and would prompt the bank to lower rates further in the first half of this year.

The ECB lowered interest rates by 50 basis points at its previous meeting on December 5, saying the sluggish pace of the eurozone economy meant inflation would not rear its head anytime soon, especially with the strong euro tamping down price pressures.

Commenting yesterday on the value of the euro, ECB President Wim Duisenberg said: "I don't know whether it (the euro) is appropriately valued. I welcome the recent appreciation of the euro as a contributing force to keep inflation under control. And on the other hand, the recent further appreciation of the euro has...no negative impact on the competitive position of Europe vis-a-vis the rest of the world."

The Bank of England also shrugged off calls for a cut in British interest rates. The bank's key base rate remains at 4% Mounting fears that the consumer spending boom could be over had increased calls for cut in interest rates this month.