|Jean-Claude Trichet, president of the European Central Bank, at a press conference at the end of an emergency Eurozone summit, Brussels, July 21, 2011. |
The European Central Bank kept its
benchmark interest rate at 1.5% today as economic growth slows in the Eurozone
and bond investors lay siege to Italy and Spain. Also on Thursday, the Bank of
England kept its key interest rate at a 1694-year low of 0.5%.
In Frankfurt, the 23-strong
governing council of the ECB left the benchmark rate unchanged after a rise of
25 basis points last month. Meanwhile, yields/ market interest rates on Italian
and Spanish sovereign bonds remain near record highs since the euro was launched
The combination of slowing growth
and a resumption of the debt crisis at an elevated level, is expected to keep
rates stables in coming month.
Jean-Claude Trichet, ECB president,
will hold a press conference at 2:30 pm in Frankfurt and 1:30 pm in Dublin and
his reaction to the market reactions to Italy and Spain will be keenly watched.
Webcast of press conference (recording
available after 3 pm Irish time.
In London, the Bank of England’s
Monetary Policy Committee today voted to maintain the bank's official interest
rate at 0.5% - - the lowest since the bank was founded in 1694. The Committee
also voted to maintain the stock of asset purchases (of bonds in the market to
increase the money supply) financed by the issuance of central bank reserves at
The Committee’s latest inflation and
output projections will appear in the Inflation Report to be published at 10.30
am on Wednesday August 10.
The previous change in bank rate was
a reduction of 0.5 percentage points to 0.5% on March 5, 2009. A programme of
asset purchases financed by the issuance of central bank reserves was initiated
on March 5, 2009. The previous change in the size of that programme was an
increase of £25bn to a total of £200b on November 5, 2009.