The European Central Bank has decided to leave its interest rates unchanged at four percent, as the markets expected. Some have called him a hero for moving fast last week to flood the money – lending market with emergency funds to prevent paralysis. Others say ECB President Jean Claude Trichet should have got to the root of the problems, instead of injecting cash. But he remains decisive, saying:
“The medium term outlook for price stability remains subject to upside risks, as identified by both our economic and monetary analysis. Incoming macro economic data also confirm the strong fundamentals of the Euro area economy and support a favourable medium term outlook for real GDP growth”.
In spite of no change this time, interest rates are at their highest for well over a year. But economists still expect the ECB to raise rates later this year because of underlying economic strength in the eurozone, and the pressures of inflation. The Bank of England stayed out of the action. It too kept official interest rates steady at 5.75 percent, for a second month running, saying it was keeping a close eye on market developments.