ECB keeps status quo on rates and bonds

The European Central Bank has maintained the status quo on interest rates, bank liquidity and the purchase of government bonds.

Most observers had expected eurozone rates to remain at one percent and unlimited liquidity for banks for three months.

But many investors had hoped the buying of bonds, or the Securities Market Program (SMP), would be stepped up and there was little evidence of unanimity on the Bank’s board.

ECB President Jean-Claude Trichet told a press conference:

“We have consensus for the decision we took on the three months; and we have the overwhelming majority, I always refer to, as regards the SMP and let me only say that what counts, of course, is the Governing Council. This is the entity that is responsible for, as I said, delivering price stability to the fellow citizens of Europe.”

A report on the eurozone’s economy in the third quarter showed that it is growing but at a slower rate. GDP in the 16-country area expanded by 0.4 percent from the second quarter, or 1.9 percent year-on-year, in line with expectations.

But the growth was not universal: German output rose 0.7 percent, while Greece contracted 1.1 percent.

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