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ECB extends bank lending‎, raises growth forecast

ECB extends bank lending‎, raises growth forecast
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There were no signs of European Central Bank policymakers ending economic stimulus measures at their monthly meeting.

Interest rates are to be kept on hold at a record low of one percent into next year.

That reflects continuing uncertainty about the recovery though ECB economists did increase their growth forecasts to 1.6 percent for this year and 1.4 percent for next year.

ECB President, Jean-Claude Trichet said the region’s banks will have to do more to boost lending.

He told reporters: “The challenge remains for banks to expand the availability of credit to the non financial sector when demand picks up. Where necessary to address this challenge, banks should retain earnings, turn to the market to further strengthen their capital bases, or take full advantage of government support measures for recapitalisation.”

The ECB is extending its lending support for banks, which is a lifeline for those in countries like Spain, Ireland and Greece.

Borrowing from the ECB by banks in these countries has hit record highs in recent months as their economies grow only slowly or in the case of Greece remain in recession.