Eurozone interest rates remain at 0.75%, economy 'weak'
- 8 November 2012
- From the section Business
The European Central Bank (ECB) has held the benchmark eurozone interest rate at the record low of 0.75%, as had been expected.
The rate has been at this level for four months, after July's cut from 1%.
Explaining the decision, ECB president Mario Draghi said that economic activity in the euro area was "expected to remain weak".
Earlier on Thursday, the Bank of England also kept its main interest rate unchanged, leaving it at 0.5%.
"Inflation is likely to remain above 2% for the remainder of 2012," said Mr Draghi at the ECB's news conference, citing high energy prices and increases in taxes in some euro area countries.
But he said price rises were "expected to fall below that level in the course of next year".
"The underlying pace of monetary expansion continues to be subdued."
In September, the ECB announced a bond-buying programme to try to ease the financial woes of a number of member states.
Under the initiative, called outright monetary transactions or OMTs, the ECB will buy a country's government bonds after the administration in question has made a formal request for assistance.
The scheme has already been viewed as an effective insurance policy. This has eased the pressure on the bond yields of Spain and other indebted nations.
"As we said before, we are ready to undertake OMTs, which will help to avoid extreme scenarios," said Mr Draghi.
"Financial market confidence has visibly improved on the back of our decisions as regards outright monetary transactions," he said.
In response to questions, Mr Draghi said the ECB stood ready to help eurozone governments, but it was up to individual governments to make a request for help.
"On a Spanish request I will decline any comment. It's entirely in the hands of governments."
So far, no eurozone nation has asked for help.
On Wednesday, Greek MPs narrowly backed a fresh round of austerity measures, despite violent protests across the country.
The austerity package aimed at securing the next round of bailout funds for Greece was passed with the support of 153 MPs in the 300-member parliament.
Welcoming the move, Mr Draghi said "It's a very important step that the Greek government and the Greek citizens have undertaken. It really represents progress from what it was a few months ago."