Euro zone and UK interest rates unchanged

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Euro zone and UK interest rates unchanged

Euro zone and UK interest rates unchanged
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The European Central Bank has kept euro zone interest rates at a record low of one percent. There was no surprise there, but the focus at the monthly news conference held by ECB President Jean-Claude Trichet was on Greece’s escalating debt crisis.

Trichet said he has no doubt Greece will narrow its budget deficit and is not in danger of defaulting.

He said: “I would say that taking all the information I have, that default is not an issue for Greece.”

“What is very, very important is that the programme with the new measures that has been decided by Greece is implemented,” Trichet said.

He saw no reason to believe Athens’ austerity measure would not be enacted “rigorously”.

“But we will remain, of course, alert,” he added.

Trichet also repeated that he expects the euro zone’s economy to grow at a moderate pace this year and predicted the same for inflation.

Explaining the decision to leave the cost of borrowing unchanged Trichet said: “The current key ECB interest rates remain appropriate, taking into account all information and analysis that have become available since our last meeting, price developments are expected to remain moderate over the policy relevant horizon.”

At the same time, the Bank of England kept UK interest rates at a record low of 0.5 percent for the 13th month running.

Policymakers at Britain’s central bank also chose not to increase to its quantitative easing scheme to boost the economy.

That was expected as the bank needs to be seen to be politically neutral and independent ahead of the national election due on May 6.