July 2, 2009

ECB keeps interest rates unchanged

The European Central Bank left its key lending rate unchanged at 1 percent Thursday, a move anticipated by many economists.

In a prepared statement, bank President Jean-Claude Trichet said policymakers at the bank expected inflation to remain dampened over the policy-relevant horizon. Policymakers also expected a further deterioration in labor markets, he said.

An economic recovery was expected to be gradual, he said, with a return to positive growth in the second quarter of 2010.

Trichet said stimulus spending could provide more of a boost than expected, but turmoil in the financial markets, rising commodity prices and the intensification of protectionist measures would have a continued negative effects on the economy.