An image of the planned new headquarters of the European Central Bank in Frankfurt. The construction is expected to be completed by 2011.

The European Central Bank (ECB) as expected kept its benchmark interest rate on hold at 1.0%, at a meeting of the governing council in Venice. The Bank of England kept its rate on hold at 0.5%.

The Bank of England’s Monetary Policy Committee voted to maintain the official bank rate at 0.5% - - the lowest since it was founded in 1694. The Committee also voted to continue with its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves - -  the programme of quantitative easing designed to pump money into the economy by purchasing bonds, commonly known as"printing money."

The ECB president will hold a press conference from 1:30 pm Irish time.

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European Central Bank President Jean-Claude Trichet has urged political leaders to execute “ambitious” plans to reverse the common currency area's biggest budget deficit since the euro was launched in 1999.

Earlier, we reported that economists at Goldman Sachs and Barclays Capital have said failure by politicians to devise a plan and then carry it out may fuel debt and inflation, forcing the ECB to raise interest rates faster in the recovery - -  a move which could threaten the economic pick-up by driving up the euro and bond yields.

Bloomberg says while lending to households and companies has almost ground to a halt, banks expanded their holdings of government bonds by €241 billion and their loans to the public sector by €34 billion in the first eight months of the year. That will fund almost half the Eurozone’s estimated 2009 budget deficit of €560 billion, Barclays estimates.

Eurozone banks have been able to borrow from the ECB at 1 percent and make a margin on safe lending to the public sector.

The ECB is indirectly funding about a quarter of the Irish Government deficit, according to Central Bank data.

The data shows that Irish banks availed of ECB support to purchase almost €7 billion worth of Irish Government bonds since last November, when the National Treasury Management Agency (NTMA) stepped up its borrowing programme.

Irish banks account for 26 percent of the €26.3 billion in debt issued over the 10 months to last August. The banks are able to use ECB funds to buy Irish bonds which pay rates up to 5 percent per year.

The ECB will also become the principal funder of Irish "bad bank" NAMA.

Last month, Minister for Finance Brian Lenihan said banks will get paid €54 billion for mainly toxic property loans that will be transferred to the State agency.

The Irish banks will use Irish government bonds as collateral for funding from the ECB.

Jean-Claude Trichet said on Monday that"other currencies, in particular currencies of the emerging world, should appreciate."

Weber said on Tuesday that there was a need for "greater foreign-exchange flexibility in some emerging economies."

Many Asian nations, including China, keep their currency's exchange rate effectively linked to the the dollar, with central banks managing floats within narrow margins.

Some economists claim that the Chinese renminbi is undervalued by as much as 40%.

SEE: Finfacts article Oct 07, 2009: Gold rises to a new record; Premature to expect end soon to dollar dominance