5 Jul 2013

ECB to keep interest rates low

9:57 am on 5 July 2013

The European Central Bank intends that interest rates will remain at current or lower levels for an "extended period".

"Monetary policy will remain accommodative for as long as necessary," ECB president Mario Draghi said on Thursday.

The BBC reports this represents the first time that the ECB has given an indication of its future guidance on the rate of interest in the eurozone.

The ECB left interest rates at the level of 0.5% on Thursday.

Mr Draghi would not be drawn on how long he expected rates to remain low, only that the decision was "unanimous".

"It's not six months, it's not 12 months - it's an extended period of time," he said.

Mr Draghi also said that extensive discussions had taken place about a possible interest rate cut this month.

"The risks surrounding the economic outlook for the euro area continue to be to the downside," Mr Draghi said.

The BBC reports he said that rates would stay low as long as inflation and the economy remained weak, adding that the guidance was "unprecedented".

Bank of England decision

The Bank of England also held interest rates at 0.5% on Thursday and kept its quantitative easing programme unchanged.

The decisions were made at the first meeting of the Bank's monetary policy committee since Governor Mark Carney took over from Sir Mervyn King.

The commitee also warned that markets were wrong to assume that the Bank would start raising interest rates soon.

The BBC reports the Bank has held short-term interest rates at their current level since March 2009.