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ECB keeps eurozone rates on hold ECB keeps eurozone rates on hold
(30 minutes later)
The European Central Bank (ECB) has kept eurozone interest rates on hold at 1%, in a widely expected move. The European Central Bank (ECB) has kept eurozone interest rates on hold at 1%, in a move that had been widely expected by analysts.
Despite eurozone unemployment hitting a 10-year high in April, the ECB's decision not to further trim rates also comes amid signs of economic recovery. Unemployment in the eurozone hit a 10-year high in April, although there have also been some signs of improvement.
Analysts said the ECB was also not keen to cut rates again for fear of sparking deflation after May's official eurozone inflation figure came in at 0.0%. Analysts said the ECB was not keen to cut rates again for fear of sparking deflation after May's official eurozone inflation figure came in at 0.0%.
The Bank of England also kept UK rates on hold at 0.5% on Thursday.The Bank of England also kept UK rates on hold at 0.5% on Thursday.
Quantitative easingQuantitative easing
ECB President Jean-Claude Trichet is now due to give more details of how plans first announced last month to buy 60bn euros of company bonds ($85bn; £52bn) were progressing. ECB president Jean-Claude Trichet said that the contraction of the eurozone economy would stabilise, with growth expected to return to the eurozone by "mid-2010".
The ECB is buying the bonds as a means to increase the amount of money in the financial systel - a policy known as quantitative easing - to try to help the economy by returning lending by commercial banks to normal levels. He is expected to give more details of how plans first announced last month to buy 60bn euros of company bonds ($85bn; £52bn) were progressing.
The ECB is buying the bonds as a means to increase the amount of money in the financial system - a policy known as quantitative easing - to try to help the economy by returning lending by commercial banks to normal levels.
So far it has been far more cautious with its quantitative easing than the Bank of England and Federal Reserve, a decision that has been greatly welcomed by the German government.So far it has been far more cautious with its quantitative easing than the Bank of England and Federal Reserve, a decision that has been greatly welcomed by the German government.
Berlin has long cautioned against the more aggressive stance taken in London and Washington, saying it builds up too much debt for the future.Berlin has long cautioned against the more aggressive stance taken in London and Washington, saying it builds up too much debt for the future.
The ECB last cut rates in May, when they were reduced to 1% from 1.25% in April. The ECB last cut rates in May, when they were reduced to 1% from 1.25%. It has reduced rates seven times since last October, when rates stood at 4.25%.
It has reduced rates seven times since October of last year when the stood at 4.25%.