Euro interest rates kept on hold

The European Central Bank's (ECB) rate-setters have kept their key rate unchanged at 1.0% for another month following their regular meeting.

At a news conference, ECB president Jean-Claude Trichet predicted that falling prices would be "short-lived".

Eurozone consumer price inflation was negative in June for the first time.

Mr Trichet also said the ECB's plan to buy 60bn euros ($84bn; £51bn) of company bonds would begin on 6 July and promised more details later.

Last week, he described the eurozone economy as being in "uncharted waters", and the ECB offered 442bn euros in 12-month loans to banks.

The ECB held its latest rate-setting meeting in Luxembourg for one of the two meetings a year that it holds outside Frankfurt.

Outside the eurozone

Earlier, Sweden, which is outside the eurozone, halved its key interest rate to 0.25%, which is the lowest since records began in 1907.

Sweden's Riksbank predicted that rates would remain at the new level until late next year.

It also offered 100bn Swedish kronor ($13bn; £8bn) of loans to banks as part of attempts to lift the economy out of recession.

Iceland's central bank kept its interest rate on hold at 12%. The decision came a month after it had defied the warnings of the International Monetary Fund and cut its rate from 13%.

The ECB last cut rates in May, when they were reduced to 1% from 1.25%. It has reduced rates seven times since last October, when rates stood at 4.25%.

In the latest meeting, the 22-member council also left its other two interest rates - the marginal lending rate and the deposit rate - unchanged at 1.75% and 0.25% respectively.