|An image of the planned new headquarters of the European Central Bank in Frankfurt. ECB President Jean-Claude Trichet layed the
foundation stone on May 19, 2010. The €850m headquarters will consist of two towers—one 41 floors high and the other 44 floors—joined by a massive
conference and visitor centre where a historic fruit-and-vegetable market once stood. It will be completed in 2014. Trichet's eight-year term expires at
the end of October. |
The European Central Bank (ECB) today left its
benchmark interest rate unchanged at 1.5% for a third straight month, despite
the worsening sovereign-debt crisis. Meanwhile, the Bank of England kept its key
interest rate at 0.5% -- a 1694-year low -- and it also agreed to
buy £75bn worth of government bonds.
The ECB decision, which was widely expected,
comes after Eurozone annual inflation jumped to 3% in September, from 2.5% the
Focus now is on the ECB's monthly press
conference from Berlin at 1:30 pm Irish time, where Jean-Claude Trichet, ECB
president will respond to questions on the debt crisis and the economic
situation. Trichet, in his last press conference as president, is expected to
signal that the ECB is ready to cut interest rates for the first time since May
In London, the Bank of England said it will buy
£75bn of government bonds in a new series of quantitative easing to boost the
UK's faltering economy.
The Bank said its Monetary Policy Committee agreed to finance a second round of
asset purchases with newly created central bank money to ensure that the
inflation rate didn't fall below its 2.0% target over the medium term.
The MPC also voted to retail the UK's benchmark interest rate on hold at 0.5%.
The BoE said in
a statement that the pace of global expansion has slackened, especially in
the United Kingdom’s main export markets. Vulnerabilities associated with the
indebtedness of some euro-area sovereigns and banks have resulted in severe
strains in bank funding markets and financial markets more generally. These
tensions in the world economy threaten the UK recovery.
The Bank said that in the United Kingdom, the
path of output has been affected by a number of temporary factors, but the
available indicators suggest that the underlying rate of growth has also
moderated. The squeeze on households’ real incomes and the fiscal consolidation
are likely to continue to weigh on domestic spending, while the strains in bank
funding markets may also inhibit the availability of credit to consumers and
businesses. While the stimulatory monetary stance and the present level of
sterling should help to support demand, the weaker outlook for, and the
increased downside risks to, output growth mean that the margin of slack in the
economy is likely to be greater and more persistent than previously expected.
ECB webcast from Berlin