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 Frankfurt today. 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 expand its programme of asset purchases by £25 billion to £200 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.

Watch the webcast from this link.

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ECB President Jean-Claude Trichet may give some signals today on when the ECB will start scaling back lending to banks and whether it will raise the rate for 12-month money.

Last week, Bundesbank president and council member Axel Weber said commercial banks need to prepare for a “gradual withdrawal” of the ECB’s liquidity lifeline, and signaled its 12-month loans in December may be the last.

The Bank of England said in a statement that medium-term prospects for output and inflation continue to be determined by the balance between two opposing sets of forces. On the one hand, there is a considerable stimulus still working through from the substantial easing in monetary and fiscal policy. It said the bank’s asset purchases have helped to boost asset prices and improve access to capital markets. The sterling effective exchange rate lies around a quarter below its mid-2007 level, improving the competitiveness of UK producers.

The bank said, on the other hand, the need for banks to continue the process of balance sheet repair is likely to limit the availability of credit. And high levels of debt will weigh on spending. On balance, the Committee believes that the prospect is for a slow recovery in the level of economic activity, so that a substantial margin of under-utilised resources persists. That will continue to bear down on inflation for some time to come, offset in the short run by the impact of the past depreciation of sterling.