ECB Holds Key Interest Rate At 4.25%

(RTTNews) - Thursday, the European Central Bank left its interest rates unchanged for the second straight month in September, as expected.

At the session held in Frankfurt, the Governing Council maintained the key-lending rate, which is the minimum bid rate on the main refinancing operations, at 4.25%. The central bank had maintained the rate at a six-year high of 4% since June last year, before hiking it in July 2008.

The interest rate on the marginal lending facility was held at 5.25%, while the interest rate on the deposit facility was retained at 3.25%.

In August, the ECB had kept its key interest rate on hold after hiking 25 basis points in July to 4.25% amid high inflation and slowing growth in the Eurozone. The central bank chief Jean-Claude Trichet had signaled that there are no more hikes in store in the near term.

Trichet is expected to hold the regular post-meeting press conference at 8.30 am ET.

The Eurozone annual inflation eased to 3.8% in August from a record 4% in July. Annual inflation continues to stay above the ECB target, which is to keep inflation rates “below, but close to, 2% over the medium term”. The ECB would possibly resist pressures to slash interest rates as long as inflationary pressures remain strong.

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