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European Central Bank keeps rates at record 0.25% low | European Central Bank keeps rates at record 0.25% low |
(about 1 hour later) | |
The European Central Bank (ECB) has kept its benchmark interest rate at a record low of 0.25%. | The European Central Bank (ECB) has kept its benchmark interest rate at a record low of 0.25%. |
ECB said president Mario Draghi said rates would "remain at present or lower levels for an extended period of time". | |
There had been speculation that the bank might act to bolster fragile growth in the 18-nation euro bloc. | There had been speculation that the bank might act to bolster fragile growth in the 18-nation euro bloc. |
With eurozone inflation falling below 1%, there is also concern about deflation as consumers delay purchases in the hope of prices falling further. | With eurozone inflation falling below 1%, there is also concern about deflation as consumers delay purchases in the hope of prices falling further. |
The eurozone economy grew only 0.1% in the third quarter, while inflation, at only 0.8%, remains below the ECB's goal of about 2%. | The eurozone economy grew only 0.1% in the third quarter, while inflation, at only 0.8%, remains below the ECB's goal of about 2%. |
Mr Draghi told a news conference that the eurozone "may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below but close to 2% later on". | |
He said the economic risks for the eurozone "remain on the downside" and that the ECB is ready to "take further decisive action" using "all available tools" to spur a weak recovery. | |
In November, the ECB cut the rate to 0.25%, from 0.5%, which Mr Draghi said at the time was done because of continuing economic weakness among some eurozone members. | |
He told Thursday's news conference that the ECB was keeping a close eye on the low inflation rate, but said it was important to understand that the recent fall was in large part due to a technical adjustment of service sector data in Germany. | |
"We will act when we have reason to think that our medium-term assessment for inflation is changing... Let me be absolutely clear, we have a mandate to maintain price stability - in both directions," Mr Draghi said. | |
He gave no indication of what action the ECB might take, but said the bank would consider all measures. | |
Following his comments that interest rates might stay low for some time, the euro fell to 82.27 pence, its lowest against sterling in a year. |