| ||
| ||
| ||
 |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||
ECB keeps interest rates on hold
ROME, Italy (CNN) -- The European Central Bank left interest rates on hold on Thursday as the war in Iraq created continued economic uncertainty. "It is not possible at this juncture to assess what effect they will have on the global economy and on economic development and the medium term outlook for price stability in the euro area,'' ECB President Wim Duisenberg told a news conference following the bank's decision. Most economists had predicted the bank would leave interest rates at 2.5 percent for the 12-nation eurozone. They were cut last month and are the lowest in almost three-and-a-half years. "It would be inappropriate to cut rates now -- its best to see where this war is going," Hand Redeker, economist at BNP Paribas, told CNN before the announcement. Although many politicians and economists have called on the bank to cut rates, its rate-setting committee had signaled it would keep levels steady until it could count the economic cost of war. The U.S. Federal Reserve has a similar strategy. But economists do expect a cut in May as the economic impact is already being felt by the airline industry. Dutch airline KLM said on Wednesday it would cut up to 3,000 jobs due to the war. (Full story) A rate cut would reduce borrowing costs for companies, easing the pressure on debt and making it easier to borrow money for investments. Meanwhile, data suggests the eurozone economy is faltering. Manufacturing is back in recession as consumer and corporate confidence declines. BNP's Redeker is predicts a cut of about 0.5 percentage points in May. And ECB policymakers are showing concern. "I would not rule out slowdown for the European Union the way things are shaping up, with the economic growth rate slowing below one percent,'' ECB governing council member Nicholas Garganas from Greece was quoted by Reuters as saying on Tuesday. That comes only a month after the ECB revised downward its official growth forecast to one percent from 1.1 percent-2.1 percent.
|
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
|
