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ECB committed to low rates

Thursday, August 01, 2013 - 01:55

Aug. 1 - The European Central Bank keeps interest rates at a record low, despite signs of a tentative recovery in the euro zone. Kirsty Basset reports.

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The ECB has held interest rates at a record low half a per cent. President Mario Draghi indicated they will remain there for some time - hinting policy would not be tightened until well into next year at the earliest. (SOUNDBITE)(English) ECB PRESIDENT MARIO DRAGHI SAYING: "It thereby provides support to a gradual recovery in economic activity in the remaining part of the year and in 2014." Draghi was guarded about whether or not a rate cut was discussed, leaving markets guessing as to likely future interest rate moves. Nomura's Chief European Economist Jacques Cailloux. (SOUNDBITE)(English) NOMUA CHIEF ECONOMIST JACQUES CAILLOUX SAYING: "I mean the backdrop of an economic recovery, the backdrop of Fed tapering, and LTR repayments all add up to higher short term interest rates independently of the forward guidance they've put in place." The decision follows a string of promising data - and signs Europe may be improving. The latest euro zone survey measuring manufacturing activity swung into growth territory for the first time in over a year. And earlier this week a survey showed German consumer confidence at its highest level in nearly six years. The number of people out of a job has also fallen for the first time in over two years - but it's still too early to be talking about a recovery. IG's Alistair McCaig. (SOUNDBITE)(ENGLISH) IG MARKET ANALYST ALISTAIR MCCAIG SAYING: "If you drill down just a little bit further of course we're seeing youth unemployment across Europe at 39 per cent. That is a recipe for disaster further down the road with those sort of figures. As yet we still haven't really been convinced that the European Union and the euro zone as a whole have actually turned that corner." Across the Channel, the Bank of England followed suit...also leaving interest rates unchanged at half a percent. The bank didn't make any announcement about how long interest rates might stay there. But investors are eagerly awaiting an announcement expected next week, of a new strategy to get Britain's economy back on track.

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ECB committed to low rates

Thursday, August 01, 2013 - 01:55