Despite Soaring Euro and Growth Worries, European Central Bank Leaves Key Interest Rate Untouched
Published:
13 January 2004 y., Tuesday
The European Central Bank left its key interest rate untouched Thursday, even as a soaring euro made some economists worry about prospects for growth in the 12 countries that use the currency.
The bank's 18-member governing council left the refinancing rate at 2 percent, where it has been since a half-point cut in June.
The Bank of England also left its benchmark lending rate unchanged Thursday at 3.75 percent.
The European Central Bank's decision was widely expected, shifting the attention to any statements that bank President Jean-Claude Trichet might make afterward on the euro, which hit an all-time record of $1.2812 on Tuesday.
So far Trichet has not expressed great concern that the stronger euro will hurt the economy by dampening exports, and put pressure on the bank to cut rates. But the rally has quickly outrun many economists' predictions and raised questions about what the bank thinks now.
The bank's potential quandary is this: It's already cut interest rates to near rock-bottom levels, but the stronger euro could hurt growth by making European exports more expensive compared to competing goods from foreign producers. A rate cut could provide economic stimulus.
The bank's main goal, however, isn't growth but curbing inflation, which could be worsened by a cut at the wrong time. And its inflation projection for next year has crept up from around 1.3 percent to around 1.8 percent.
Šaltinis:
abcnews.go.com
Copying, publishing, announcing any information from the News.lt portal without written permission of News.lt editorial office is prohibited.
The most popular articles
A specific EU budget line for the new EU stabilisation mechanism should be created as soon as possible, to ensure its credibility, Council, Commission and Parliament negotiators agreed at a three-way meeting on Wednesday.
more »
New EU rule will help phone-users avoid astronomical bills for web-surfing and downloads abroad.
more »
The Communication approved today by the Commission builds on the principles presented on 12 May to reinforce the economic governance in the European Union.
more »
Eurostat report just published shows that the crisis has brought some lower taxes.
more »
New legislation is needed to ensure fair returns to farmers and transparent prices to consumers, by enforcing fair competition throughout the food supply chain, said Agriculture Committee MEPs on Monday.
more »
Fish imports play a crucial role in supplying the European market, yet fisheries and aquaculture are strategic sectors that do not lend themselves to a purely free-trade approach, believes the EP Fisheries Committee.
more »
I will support every proposal that strengthens cooperation among the European Union's Member States and serves Lithuania's interests," President of the Republic of Lithuania Dalia Grybauskaitė said at the meeting with EU Member States' ambassadors resident in Lithuania.
more »
The fourth World Lithuanian Economic Forum “High tech innovation & investment: local to global” will start in London on 22 June.
more »
Lithuania aims for the five Nordic countries and three Baltic States to become single community of values, which would be linked by a versatile quality of democracy, security and everyday life.
more »
MEPs decided on Wednesday to create a special committee to prepare for the EU's next long-term budgetary framework.
more »