Page last updated at 12:24 GMT, Thursday, 10 April 2008 13:24 UK

ECB leaves rates unchanged at 4%

Euros
The ECB holding rates helps the euro against other currencies.

The European Central Bank (ECB) has kept interest rates unchanged at 4% as concerns about inflation outweigh evidence of slower economic growth.

Inflation is being stoked by record food and energy costs, and analysts have warned that it may prove difficult to slow price growth in coming months.

However, critics have called for a rate cut, saying economic growth may stall.

Earlier, the Bank of England cut its main interest rate by a quarter of a percentage point to 5%.

The ECB's decision to hold rates will buoy the euro, which is currently at a record high against the pound.

It has gained strength because of interest rate cuts in the US and UK, meaning that the dollar and the pound now offer lower returns.

Many analysts expect that there will be a long wait before eurozone rates change.

The ECB was set to "keep the door shut for possible rate cuts in the foreseeable future", said Commerzbank economist Gavin Friend

ECB president Jean-Claude Trichet has said that controlling inflation is the bank's priority.

In March, eurozone inflation hit 3.5% in March - well above the bank's 2% target.




SEE ALSO
ECB rates stick on price concerns
06 Mar 08 |  Business
Eurozone interest rates unchanged
07 Feb 08 |  Business
Eurozone inflation at new record
31 Jan 08 |  Business
Eurozone confidence at fresh low
07 Jan 08 |  Business
ECB attacks France over finances
24 Sep 07 |  Business
European economy 'sound' - Trichet
11 Sep 07 |  Business

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