ECB keeps eurozone rate at 1%

by Richard Kilner

Story link: ECB keeps eurozone rate at 1%

The European Central Bank’s (ECB) Governing Council has elected to retain the eurozone’s interest rate at its historic low of 1%.

The rate has stood at 1%, unaltered, since May when it was reduced by 25 basis points, a full 325 basis points lower than in July 2008.

Most central banks have yet to increase rates following widespread and deep cuts during the height of the financial crisis and global recession to create a monetary stimulus.

However, the Reserve Bank of Australia has bucked this trend, and this month increased rates by 25 basis points for the third consecutive month so that the present Australian interest rate is 3.75%.

In the United Kingdom the Bank of England has retained rates at the lowest ever level (0.5%) for months on end, and recently increased the quantitative easing asset purchases programme (effectively printing money) by £25bn to £200bn.