ECB holds rates as inflation eclipses growth risks

FRANKFURT Thu Sep 6, 2012 7:49am EDT

A structure showing the Euro currency sign is seen in front of the European Central Bank (ECB) headquarters in Frankfurt July 11, 2012. REUTERS/Alex Domanski

A structure showing the Euro currency sign is seen in front of the European Central Bank (ECB) headquarters in Frankfurt July 11, 2012.

Credit: Reuters/Alex Domanski

FRANKFURT (Reuters) - The European Central Bank held its main interest rate at a record low of 0.75 percent on Thursday, holding fire after a pick-up in inflation last month offset pressure to breathe life into the flagging euro zone economy by easing borrowing costs.

Annual euro zone inflation accelerated to 2.6 percent in August from 2.4 percent in July, coming in stronger than expected and further above the ECB's target of just below 2 percent.

The ECB also left the interest rate on its deposit facility at 0.0 percent - a low it went to for the first time in July to encourage banks to lend overnight to other banks, where they receive a higher rate, currently about 0.1 percent.

The ECB held its marginal lending facility - or emergency borrowing rate - at 1.50 percent.

(Writing by Paul Carrel)

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Comments (4)
peterkuck wrote:
The Habit of loaning banks money at 0% is just another way of giving the working taxpayers money to political cronys

Sep 06, 2012 8:42am EDT  --  Report as abuse
You can thank the FED for monetizing our governments debt, the totally predictable result of wasteful and excessive spending of fiat money they knew could ever be repaid in our lifetime.

Sep 06, 2012 9:09am EDT  --  Report as abuse
jeffersonite wrote:
Huh. Imagine that. Super-low interest rates (aka “printing money”) fails due to inflation… Can anyone say, “Cause & Effect”?
Doesn’t anyone realize that when the banks “loan” money to the governments, the terms for repayment are put onto future generations? It’s in the contract!
Imagine how much the banks would loan ME if I could agree that my great-grandchildren would be responsible for my debt!

Sep 06, 2012 10:09am EDT  --  Report as abuse
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