ECB freezes interest rates at 3.25%

The European Central Bank has held interest rates at 3.25%.

A freeze in the cost of borrowing was predicted by analysts.

It's thought the bank's four cuts last year, totalling 1.5%, have helped kick-start a European economic recovery.

Europe's manufacturers eased cuts in production throughout December, a sign the region's slump may be easing.

Euro-bank council member Ernst Welteke, who is also president of the Bundesbank, said yesterday that Germany's economy would bounce back after sinking into recession last quarter.

The ECB's four rate cuts during 2001 compare with 11 by the US Federal Reserve and seven by the Bank of England.

Hilary Cook, of Barclays Stockbrokers, said : "I think a cut would have been welcomed by the market, but it seems as if the bank is planning a later reduction in rates.

"The strength of the euro will have been welcomed by them, but they will have delayed a rate cut to make sure its arrival hasn't stoked up inflationary pressure."