Business

Eurozone interest rates held at 1.25% by ECB

Euro v US Dollar

Last Updated at 20 Nov 2017, 12:22 GMT *Chart shows local time EUR:USD intraday chart
€1 buys change %
1.1777 -
-0.00
-
-0.11

The European Central Bank (ECB) has held eurozone interest rates at 1.25%.

Last month, the bank increased rates from 1% - the first increase in almost two years after being held at a record low following the financial crisis.

The ECB is trying to curb inflation in some of the eurozone's 17-member countries where inflation is growing.

But it also needs to balance that with keeping rates low enough for growth in weaker economies such as Portugal, Greece and the Irish Republic.

The euro lost nearly a cent after the ECB's president, Jean-Claude Trichet, explained his decision at the regular news conference that follows the bank's monthly interest rate announcement.

Investors found little in his remarks to indicate another rate rise soon, and in late European trade the euro fell further - down 1.5% against the dollar at $1.46. In sterling terms, the euro was worth 88.9p.

Mr Trichet said the decision to keep rates on hold was unanimous.

The ECB would "continue to monitor very closely all developments" with respect to price stability, he added.

Observers were expecting to hear him say the bank was "vigilant" on inflation, a word viewed as code for an imminent interest rate rise.

Mr Trichet warned inflationary pressures were still present, mainly in the form of higher energy and other commodity prices.

He said that the information that had become available since the bank's rate rise in April "confirmed the adjustment was warranted".

Figures released at the end of last month showed inflation rose in the eurozone from 2.7% to 2.8%.

The ECB is charged with keeping inflation below, but close to, 2%.

The bank also kept two other benchmark rates, the marginal lending rate and the deposit rate, unchanged at 2% and 0.5%.

Related Internet links

The BBC is not responsible for the content of external Internet sites