Euro Falls as Economic Outlook Darkens in Europe ...
Eurozone rates on hold at 4.25% ...
ECB raises interest rates ...
The European Central Bank (ECB) has left interest rates unchanged at 4.25% amid faltering economic growth and rising inflation in the eurozone.
ECB President Jean-Claude Trichet weighed up inflation of 3.8% and recent evidence that some eurozone nations are on the brink of recession.
Many analysts said they expect the cost of borrowing to remain at this level for the rest of the year.
Inflation worries forced the ECB to raise rates by 0.25% in July.
Earlier on Thursday, the Bank of England left the cost of borrowing in the UK unchanged at 5%.
Inflation threat
The key concern for ECB policymakers is controlling inflation which remains well above its 2% target due to rising food and energy prices. The bank is also concerned that wage demands could further fuel inflation, analysts said.
But Mr Trichet also faces the prospect of economic growth in the region grinding to a halt.
Figures from the European Union showed the eurozone economy shrank 0.2% in the second quarter of the year compared with the previous quarter.
There are increasing fears that the region could be entering a recession - or two successive quarters of contraction,.
The OECD recently said that it expected growth in the three largest eurozone economies - Germany, France, and Italy - to be broadly flat for the rest of the year.
(BBC)
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