The European Central Bank has kept its record low interest rate at one percent amid some optimism the recession has done its worst.
But a sense of realism persists nonetheless; the ECB predicted the eurozone economy would contract this year by more than previously thought due to the aftershocks of the recession. ECB President Jean Claude Trichet said: “After a stabilisation phase, positive quarterly growth rates are expected by mid-2010. This assessment incorporates adverse lagged effects such as a further deterioration in labour markets which are likely to materialize in the coming months.” Trichet did not rule out further interest rate cuts and said a 60 billion-euro plan to inject cash into the economy would not be expanded for now. His announcement came amid figures putting European consumer confidence at a six-month high. The Bank of England also kept its record low interest rate stable at 0.5 percent. The bank’s governor Mervyn King also decided against injecting more money into the British economy, believing it is keeping itself afloat for now.