ECB takes rate hikes off agenda due to debt crisis

The European Central Bank effectively called a halt to its cycle of rising interest rates yesterday, saying the ongoing eurozone debt crisis was hurting economic prospects for the single currency area. The ECB’s policy-setting governing council voted...

The European Central Bank effectively called a halt to its cycle of rising interest rates yesterday, saying the ongoing eurozone debt crisis was hurting economic prospects for the single currency area. The ECB’s policy-setting governing council voted to leave the rate for its main refinancing operations unchanged at 1.5 per cent at its regular monthly meeting here, as expected. Just 45 minutes earlier the Bank of England had also held borrowing costs, at a record low level of 0.50 per cent.

At a news conference, ECB President Jean-Claude Trichet explained that the overall outlook for growth and inflation had changed over the past four weeks - not least because of the ongoing debt crisis - and that had caused the bank to rethink its stance on interest rates.

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