The European Central Bank has kept its benchmark interest rate at 2%. The move is designed to support a euro zone economic recovery that is being undermined by record oil costs and rising unemployment. ECB President Jean-Claude Trichet spoke to reporters in Frankfurt after the decision.With oil having jumped in price 56% so far this year, he said there are greater risks to growth and inflation, which the bank wants to keep just below 2%:“Persistantly high and rising oil prices have had a visible, direct impact on consumer prices this year and inflation is likely to remain significantly above 2% in the coming months. This is a worrisome development.” But Trichet did add that despite the worrisome gain in consumer prices there is no strong indication as yet that inflation pressures are building up over the medium-term in the euro area. Top ECB officials have said they are not concerned that the euro’s increase will hurt the region’s exports, but economists warn if it continues it will damage exports enough to trim euro zone growth. The current strong value of the euro against the dollar does help offset the cost of oil and other imports.
ECB leaves interest rate unchanged again