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| Version 0 | Version 1 |
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| ECB leaves interest rates on hold | ECB leaves interest rates on hold |
| (20 minutes later) | |
| The European Central Bank (ECB) has opted to keep interest rates on hold at 4%, as jitters continue to unsettle markets worldwide. | The European Central Bank (ECB) has opted to keep interest rates on hold at 4%, as jitters continue to unsettle markets worldwide. |
| The widely-expected decision in the 13-member area comes as central banks try to prevent market turmoil from turning into a bigger financial crisis. | The widely-expected decision in the 13-member area comes as central banks try to prevent market turmoil from turning into a bigger financial crisis. |
| Before the recent volatility, caused by problems in the US housing market, rates had been set to rise to 4.25%. | Before the recent volatility, caused by problems in the US housing market, rates had been set to rise to 4.25%. |
| Earlier on Thursday, the Bank of England kept UK rates on hold at 5.75%. | Earlier on Thursday, the Bank of England kept UK rates on hold at 5.75%. |
| Uncertainty | |
| Central banks in Australia and Canada also decided to keep rates on hold this week. | Central banks in Australia and Canada also decided to keep rates on hold this week. |
| Explaining the background to the ECB's unanimous decision, its president Jean-Claude Trichet said the fundamentals of the eurozone economy remained strong but the recent turmoil on financial markets meant policymakers needed to proceed with caution. | |
| "The financial market volatility and reappraisal of risk in recent weeks have led to an increase in uncertainty," he said. | |
| "Given this high level of uncertainty, it is appropriate to gather additional information and examine new data before deriving further conclusions for monetary policy." | |
| Mr Trichet said growth across the eurozone had slowed during the second quarter but that key indicators such as unemployment remained "favourable". | |
| 'Right decision' | |
| Before last month's market volatility forced the ECB to pump billions into the eurozone banking system, experts had been expecting it to raise rates one more time this year. | Before last month's market volatility forced the ECB to pump billions into the eurozone banking system, experts had been expecting it to raise rates one more time this year. |
| But in line with other central banks, the ECB is now more cautious about the economic outlook because of the credit problems in the US and Europe. | |
| Some believe rates are now likely to stay on hold until the extent of the impact of the US sub-prime crisis on the global economy become clearer. | Some believe rates are now likely to stay on hold until the extent of the impact of the US sub-prime crisis on the global economy become clearer. |
| "It is the right conclusion," Ken Watrett, chief economist of BNP Paribas, said of the ECB's latest decision. | "It is the right conclusion," Ken Watrett, chief economist of BNP Paribas, said of the ECB's latest decision. |
| "They want to wait and see and take some time to see what the implications will be in the financial markets and what the long-term consequences will be." | "They want to wait and see and take some time to see what the implications will be in the financial markets and what the long-term consequences will be." |
| The ECB has raised rates eight times in the past two years. | The ECB has raised rates eight times in the past two years. |