The Governing Council of the EBC has held interest rates at 4.25% as the Eurozone feels the pinch.
Minimum bid rate on the main refinancing operations will remain at 4.25%, while interest rates on the marginal lending facility will stay unchanged at 5.25%. The deposit facility holds at 2.35%.
Jean-Claude Trichet, ECB president said, after a ‘brilliant’ first quarter, Europe has entered a trough, which will progressively clear and it will see a gradual recovery.
The situation is highly conditional, but the ECB will do what is needed so by 2010, it will reach its goals, he stressed.
According to the BBC, the main concern for the ECB is how to control inflation, which they believe is 3.8%, well above its target 2%, due to an increase in energy and food prices.
The council is also worried about growth potential as Europe seems to be on the brink of recession.
The OECD has recently predicted expected growth in Germany France and Italy to be flat for the rest of this year.
“It’s a phenomenon which could hit all economies, not just the Euro region,” said Trichet.
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