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ECB holds rates at 1%

The Governing Council of the European Central Bank (ECB) has elected to retain the eurozone’s interest rate at 1%.

The decision means that the single currency zone continues to have the lowest interest rate in its brief history, following the slashing of rates during the financial crisis to provide a monetary stimulus and stave off the worst effects of recession.

The Bank of England’s Monetary Policy Committee will announce the British interest rate later this month, and although speculation has begun to mount regarding a possible rise the likeliest outcome is a retention of the 0.5% rate.

When the austerity measures of the Coalition Government come into force it is expected that growth will be eroded as a consequence, prompting some to advocate low rates, to help bolster the economy.

However, others have expressed concern at the continually higher-than-target rate of inflation, which could be addressed by higher rates.

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