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ECB leaves interest rates unchanged | |
(35 minutes later) | |
The European Central Bank (ECB) has left interest rates on hold, a month after it cut rates as part of measures aimed at stimulating the eurozone. | |
In June, the ECB became the first major central bank to introduce negative interest rates. | In June, the ECB became the first major central bank to introduce negative interest rates. |
The bank cut its deposit rate from zero to -0.10% and its benchmark rate from 0.25% to 0.15%. | The bank cut its deposit rate from zero to -0.10% and its benchmark rate from 0.25% to 0.15%. |
It also said it would offer long-term loans to commercial banks at cheap rates. | It also said it would offer long-term loans to commercial banks at cheap rates. |
The move is aimed at encouraging banks to lend more to businesses and boost economic growth. | The move is aimed at encouraging banks to lend more to businesses and boost economic growth. |
There had been concerns that the eurozone could slip into deflation, raising fears that consumers might spend even less because they would expect prices to fall in future months. | There had been concerns that the eurozone could slip into deflation, raising fears that consumers might spend even less because they would expect prices to fall in future months. |
Figures on Monday showed inflation in the eurozone remained at 0.5% in June - within what ECB President Mario Draghi has called "the danger zone" below 1%. | Figures on Monday showed inflation in the eurozone remained at 0.5% in June - within what ECB President Mario Draghi has called "the danger zone" below 1%. |
Sluggish growth | Sluggish growth |
Ahead of the ECB's decision, two separate surveys painted different pictures of eurozone economic activity. | Ahead of the ECB's decision, two separate surveys painted different pictures of eurozone economic activity. |
Data from the Economic Cycle Research Institute (ECRI) suggested inflationary pressures in the eurozone reached a 25-month high in May. | Data from the Economic Cycle Research Institute (ECRI) suggested inflationary pressures in the eurozone reached a 25-month high in May. |
The Eurozone Future Inflation Gauge, published by the ECRI, rose to 95.3 in May from 94.0 in April. | The Eurozone Future Inflation Gauge, published by the ECRI, rose to 95.3 in May from 94.0 in April. |
Lakshman Achuthan, the ECRI's chief operating officer, said the data suggested eurozone inflation was "likely to bottom out in the coming months". | Lakshman Achuthan, the ECRI's chief operating officer, said the data suggested eurozone inflation was "likely to bottom out in the coming months". |
But a survey from economic analysts Markit suggested eurozone businesses grew at their slowest pace for six months in June. | But a survey from economic analysts Markit suggested eurozone businesses grew at their slowest pace for six months in June. |
Business activity in France - the currency bloc's second largest economy - shrank at the fastest pace in four months, while growth in the eurozone's biggest economy, Germany, also slowed. | Business activity in France - the currency bloc's second largest economy - shrank at the fastest pace in four months, while growth in the eurozone's biggest economy, Germany, also slowed. |
However, Chris Williamson, Markit's chief economist, said there were reasons for optimism despite data that on first glance made "grim reading". | However, Chris Williamson, Markit's chief economist, said there were reasons for optimism despite data that on first glance made "grim reading". |
He noted that Markit's survey found new orders rising at their fastest rate in three years in June, suggesting growth could accelerate in the second half of the year. | He noted that Markit's survey found new orders rising at their fastest rate in three years in June, suggesting growth could accelerate in the second half of the year. |