The two most important European central banks left their benchmark interest rates unchanged Thursday as they waited to assess whether sharply slower growth is helping to curb inflation. The ECB has "no bias" regarding the direction of interest rates, the bank's president, Jean-Claude Trichet, said at a press conference, even as he warned that "inflationary risks are to the upside."
The ECB now expects growth in the euro zone of 1.4 percent in 2008, down from its prior forecast of 1.8 percent, and 2009 growth of 1.2 percent, down from 1.5 percent. It also raised its forecast for inflation to 3.5 percent in 2008 from 3.4 percent, and to 2.6 percent from 2.4 percent in 2009.
The British central bank, meanwhile, has kept official interest rates unchanged since April as its main focus is keeping inflation at the government's 2 percent target rather than stimulating growth. The bank made no additional statement.
Insight via IHT
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