Category: Currencies (4)

The European Central Bank cut its benchmark interest rate by 25 basis points to a new record low of 1 per cent today, as expected.

European Central Bank President Jean-Claude Trichet said the euro-zone economy was showing tentative signs of stabilising at a very low level.

The European Commission has forecast that the end of the recession is in sight.

The Bank of England has kept interest rates on hold at 0.5% and announced that it will inject an extra £50bn into the UK economy.

ECB HQ Frankfurt

ECB HQ Frankfurt

Eurozone interest rates have been slashed by a half percentage point to the lowest level ever as the European Central Bank responds to continental Europe’s worst recession since the second world war.

The ECB said its main interest rate would fall from 2 per cent to 1.5 per cent, bringing the total cut since early October to 275 basis points, and taking the eurozone’s monetary guardian into territory not charted since the euro’s launch in 1999.

The pound rose against the dollar and euro after a survey showed U.K. consumer confidence in February rose from the lowest level in at least four years.

The currency also advanced on speculation the Bank of England may bolster economic growth by cutting its benchmark rate to a record low tomorrow and signaling its ready to buy government bonds as part of a quantitative easing policy. An index of U.K. sentiment increased to 43 last month, from 41 in January, which was the worst result since data began in 2004, Nationwide Building Society said today.