European Central Bank keeps key interest rate at record high

The ECB said it is keeping its benchmark rate at 4% because inflation was ‘likely to pick up again temporarily in the near term’ (Michael Probst/AP)

The European Central Bank (ECB) has kept its key interest rate at a record high and is now facing expectations it will start cutting borrowing costs next year to support the shrinking economy.

It follows similar decisions this week by the US Federal Reserve, Bank of England and Swiss National Bank to leave rates unchanged. The Fed also signalled it could make three interest rate cuts next year.