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ECB keeps interest rates unchanged


economy

ECB keeps interest rates unchanged

Despite a weakening eurozone economy and Spain’s banking troubles, the European Central Bank left interest rates for the region unchanged at its latest policy meeting on Wednesday.

The ECB wants governments to do more to address the problems.

The lack of change from the record low 1.0 percent rates dashed some market expectations that it might move quickly to combat fears about the health of the eurozone.

Markets were unsure how the ECB would react to the recent wave of weak economic data, knowing that the bank also wants to keep the pressure on eurozone leaders to tackle the crisis more effectively.

In the run up to the meeting, the head of the IMF Christine Lagarde, said the bank had room to cut rates.

Spain and other hard hit parts of the euro zone would also like the ECB bond buying to provide them with cover while they undertake planned repairs to their economies.

The bank’s dilemma is that if does too much, pressure for government action falls. Yet if it does nothing, troubled sovereign debtors could find it harder and harder to finance themselves or maintain confidence in the banks that have bought much of their debt.

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