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Eurozone interest rates held at low of 0.5% ECB improves forecast for eurozone economy this year
(35 minutes later)
The European Central Bank (ECB) has held interest rates at a historic low of 0.5% despite tentative signs that the eurozone is recovering. The European Central Bank (ECB) has improved its outlook for the eurozone economy this year.
The eurozone emerged from recession in the second quarter of this year, with growth of 0.3% recorded between April and June. It now expects the single-currency area to shrink 0.4% compared to its previous forecast in June of a 0.6% contraction.
The ECB on Thursday held interest rates at 0.5% despite tentative signs that the eurozone is recovering.
The 18-nation bloc emerged from recession in the second quarter of this year, with growth of 0.3% recorded between April and June.
Low rates
ECB president Mario Draghi said: "Output is expected to recover at a slow pace, in particular owing to a gradual improvement in domestic demand supported by the accommodative monetary policy stance."
But there is still concern that many European economies remain in trouble.But there is still concern that many European economies remain in trouble.
In July, ECB president Mario Draghi said interest rates are likely to remain low for an "extended period". In July, Mr Draghi said interest rates are likely to remain low for an "extended period".
It was the first time the central bank issued so-called forward guidance on interest rates, but the bank has not given any indication on how long an "extended period" might be.It was the first time the central bank issued so-called forward guidance on interest rates, but the bank has not given any indication on how long an "extended period" might be.
That will in part depend on how European economies fare over the coming months.That will in part depend on how European economies fare over the coming months.
In the second quarter of the year, Germany and France saw stronger-than-expected growth of 0.7% and 0.5%, respectively.In the second quarter of the year, Germany and France saw stronger-than-expected growth of 0.7% and 0.5%, respectively.
But weaker economies, including Spain, Italy, and the Netherlands, all saw output fall.But weaker economies, including Spain, Italy, and the Netherlands, all saw output fall.
The ECB expects the recovery to be gradual over the rest of the year, and strengthen in 2014.The ECB expects the recovery to be gradual over the rest of the year, and strengthen in 2014.