ECB and BoE leave rates unchanged
(9 October 2009 – Europe) The European Central Bank (ECB) and the Bank of England (BoE) have decided to leave their key interest rates at record lows.
The ECB’s rate has remained unchanged since May when it dropped by 0.25 percent to 1.0 percent and the BoE’s last rate movement was in March when it dropped by 0.50 percent to 0.50 percent overall.
The ECB made its decision to leave the rate unchanged as they believe uncertainty remains high.
ECB, president, Jean-Claude Trichet, said that the bank has had signs of stabilisation and is out of the free-fall but believes the bank needs to be cautious and prudent.
In London, in addition to keeping its main interest rate unchanged at 0.5 per cent, the BoE also held off from any further moves to expand the money supply.
The bank will keep its current asset purchase program, known as quantitative easing, under review.
Under the current purchase program, the BoE can buy up to £175 billion (A$313 billion) of financial assets such as government bonds from the banks.
The overall aim is to increase the money supply to assist banks in an effort to eventually starting to lend more to the private sector.
The committee expects the announced program to take another month to complete. The scale of the program will be kept under review, the BoE said.
The ECB made its decision to leave the rate unchanged as they believe uncertainty remains high.
ECB, president, Jean-Claude Trichet, said that the bank has had signs of stabilisation and is out of the free-fall but believes the bank needs to be cautious and prudent.
In London, in addition to keeping its main interest rate unchanged at 0.5 per cent, the BoE also held off from any further moves to expand the money supply.
The bank will keep its current asset purchase program, known as quantitative easing, under review.
Under the current purchase program, the BoE can buy up to £175 billion (A$313 billion) of financial assets such as government bonds from the banks.
The overall aim is to increase the money supply to assist banks in an effort to eventually starting to lend more to the private sector.
The committee expects the announced program to take another month to complete. The scale of the program will be kept under review, the BoE said.
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