ECB predicts return to growth as interest rates unchanged

The European Central Bank (ECB) has opted to leave its key interest rate unchanged, saying that the global downturn is "bottoming out" and forecasting a return to growth next year.

At a meeting today the ECB Governing Council said it would leave its main refinancing operations rate unchanged at a record low of 1%

Interest rates on the marginal lending facility and the deposit facility will also remain unchanged at, 1.75% and 0.25% respectively.

Speaking at a press conference this afternoon, ECB President Jean-Claude Trichet said: "While uncertainty is still high, there are increasingly signs that the global recession is bottoming out."

Mr Trichet said that while economic activity over the remainder of this year is likely to remain weak, "the pace of contraction is clearly slowing down".

The ECB chief said that following a phase of stabilisation, a gradual recovery with positive quarterly growth rates was expected next year.

"The significant policy stimuli in all major economic areas should support growth globally, including in the euro area," Mr Trichet said.

However, he added, "uncertainty remains high and we have to be prepared for ongoing volatility in incoming data".