ECB keeps Eurozone interest rates at 1% for fourteenth consecutive month

The Governing Council of the European Central Bank (ECB) has decided that the Eurozone interest rate should remain unchanged at 1.00%.This was the fourteenth consecutive month that the ECB has kept its monetary policy unchanged at a historic low.

At the same time, the ECB Council has also maintained the interest rates on the Eurozone marginal lending facility and deposit facility unchanged at 1.75% and 0.25% respectively.

Addressing journalist at a press conference at the ECB’s headquarters in Frankfurt, ECB President Jean-Claude Trichet explained that how based on its regular economic and monetary analyses, the Governing Council viewed the current key ECB interest rates as “appropriate”.

Trichet added that taking into account all the new information which had become available since the ECB’s Governing Council on 10 June 2010, “we continue to expect price developments to remain moderate over the policy-relevant medium-term horizon, benefiting from low domestic price pressures”.

The latest information had also confirmed that the economic recovery in the euro area continued in the first half of 2010. “Looking ahead, we expect the euro area economy to grow at a moderate and still uneven pace, in an environment of high uncertainty,” Trichet warned.

The ECB’s monetary analysis confirmed that “inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth.

“Overall, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households,” Trichet added.

Inflation expectations remained “firmly anchored in line with our aim of keeping inflation rates below, but close to, 2% over the medium term,” the ECB President insisted.

The firm anchoring of inflation expectations remained “of the essence,” Trichet warned.

He explained how monetary policy would do “all that is needed” to maintain price stability in the euro area over the medium term.

“This is the necessary and central contribution that monetary policy makes to fostering sustainable economic growth, job creation and financial stability,” Trichet added.

The ECB would remain “firmly committed” to price stability over the medium to longer term. The monetary policy stance and the overall provision of liquidity would be adjusted as appropriate, the ECB President insisted.

Trichet warned all Euro countries, including Malta, to maintain their fiscal consolidation programmes already agreed with the European Commission.

“In the current environment, all euro area countries must, as a minimum, comply with their fiscal consolidation plans as foreseen under the respective excessive deficit procedures,” he insisted.

He also warned that “more ambitious targets, as already adopted by a number of countries, may become necessary where current plans fall short of meeting the main objective of halting and reversing the increase in the government debt ratio”.

Moreover, Trichet insisted that all Eurozone area countries must specify “credible adjustment measures” that were “sufficient to attain their budgetary targets for 2010, 2011 and beyond.

In addition, the ECB President called on Euro area countries to “live up to their commitment to take additional measures, where needed, over the coming years”