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Euro rates at 4% in summer pause | |
(about 5 hours later) | |
The European Central Bank (ECB) has given the markets a reprieve by leaving eurozone interest rates on hold at 4% for the second month in a row. | |
The move should alleviate some of the fears over the economic impact of the sharp rise in the cost of borrowing over the past two years. | |
The decision came after policy makers conducted the monthly meeting by telephone during their summer recess. | |
Economists still believe rates will rise further by the end of the year. | |
The Bank of England's rate-setting body also kept interest rates on the hold in the UK at their current level of 5.75%. | |
The pause in rate rises in both economies should be a relief to homeowners, consumers and businesses feeling the squeeze from the higher cost of borrowing. | |
But it is believed that both central banks still regard inflation as a threat and the need to keep it under control could see eurozone rates rise at least once before before the end of the year. | |
ECB President Jean-Claude Trichet has scheduled an unexpected news conference to discuss the decision. | |