ECB leaves rates at record low
(2 December 2010 – Europe) The European Central Bank has left its key interest rate unchanged at the record low of 1.0 percent, however allayed market fears that the eurozone debt crisis would grip other European nations by extending cheap emergency funding for commercial banks.
The ECB assured that it would also continue to buy government bonds to help ease pressure on the ever-growing list of struggling eurozone countries, but disappointed markets by failing to confirm that it would increase the amount purchased.
The central bank released new growth forecasts, included an upward revision to 1.7 per cent for 2010, however warned that risks to the economic outlook are tilted to the downside, with uncertainty remaining elevated.
The 16-nation eurozone economy was forecast to grow around 1.4 per cent in 2011 and 1.7 per cent in 2012. Inflation estimates came in at 1.6 per cent for 2010, 1.8 per cent for 2011 and 1.5 per cent for 2012.
Investors had sought signs from ECB head Jean-Claude Trichet that the bank was ready to take fresh measures to tame a debt crisis now threatening Spain after engulfing Greece and Ireland.
'There is a risk of a full-blown crisis whereby contagion affects all peripheral countries and possibly moves to some core countries,' said Marie Diron, senior economist at Ernst & Young.
The central bank released new growth forecasts, included an upward revision to 1.7 per cent for 2010, however warned that risks to the economic outlook are tilted to the downside, with uncertainty remaining elevated.
The 16-nation eurozone economy was forecast to grow around 1.4 per cent in 2011 and 1.7 per cent in 2012. Inflation estimates came in at 1.6 per cent for 2010, 1.8 per cent for 2011 and 1.5 per cent for 2012.
Investors had sought signs from ECB head Jean-Claude Trichet that the bank was ready to take fresh measures to tame a debt crisis now threatening Spain after engulfing Greece and Ireland.
'There is a risk of a full-blown crisis whereby contagion affects all peripheral countries and possibly moves to some core countries,' said Marie Diron, senior economist at Ernst & Young.
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