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| ECB keeps interest rate at 0.25% despite deflation fear | ECB keeps interest rate at 0.25% despite deflation fear |
| (35 minutes later) | |
| The European Central Bank (ECB) has kept its benchmark interest rate at 0.25%. | The European Central Bank (ECB) has kept its benchmark interest rate at 0.25%. |
| The bank last cut rates to a record low in a surprise decision in November. | |
| Inflation in the eurozone region slowed to 0.7% in January from 0.8% in December. | Inflation in the eurozone region slowed to 0.7% in January from 0.8% in December. |
| Despite fears of deflation in the eurozone, the bank believes the economies of the 18 countries in the zone are recovering after the bloc emerged from recession last summer. | |
| On Wednesday, Markit's Eurozone Composite Purchasing Managers' Index indicated that growth in the private sector last month was its strongest for two and a half years. | |
| In addition to holding its benchmark rate at 0.25%, the ECB also left unchanged the rate it pays on bank deposits at zero. | |
| Holger Schmieding, chief economist at Berenberg Bank, believes the ECB is right not to lower rates further. | |
| "Prices are stable. Leading economic indicators are close to trend," he said. | |
| "The European Commission's Sentiment Index is at 100.9 which is actually a little bit above trend. So the recovery is happening. [ECB President] Draghi should have acted earlier, but belatedly, the recovery is on track." | |
| Mr Draghi will hold a press conference on the decision at 13.30 GMT. |