The European Central Bank on Thursday voted to keep its main interest rate at its historic low of 1 per cent for the seventeenth month in a row, amid uncertainty over Europe's recovery and a slowing US economy, DPA reported.
The benchmark refinancing rate stayed at the 1 per cent level where it has been since May 2009, in the midst of global recession.
The decision comes on the back of August's move by the US Federal Reserve to shore up confidence by saying further stimulus moves would be taken if necessary, amid a slowing US economy.
The bank is also expected to extend its emergency bank lending program, brought in in the midst of the credit crunch, until at least early 2011.
ECB President Jean-Claude Trichet is set to give a press conference later Thursday.
While data from Europe's largest economy, Germany, has borne positive tidings since the beginning of the third quarter, with growth expected to hit 3 per cent in 2010, economic performance in the rest of the eurozone is mixed.
Eurostat confirmed Thursday that Germany had been the best performing eurozone economy in the second quarter, with 2.2 per cent growth. France and Italy posted 0.6 and 0.4 per cent respectively, while at the other end of the scale Greece contracted by 1.5 per cent.
Persistent deficit and debt worries in Greece, Ireland and other eurozone states have kept economic expectations tempered throughout the 16-member eurozone.
Greece, with a budget deficit of some 9 per cent of GDP is still struggling with yields on government bonds in excess of 11 per cent.
On Wednesday the International Monetary Fund (IMF) said that several large developed economies were near their "debt limit," and in recent days ECB President Jean-Claude Trichet has warned that the "debt overhang" from the financial crisis must be tackled.
However on the back of the strong German performance and a relatively weak euro, the bank may yet upgrade its eurozone growth forecast to 1.4 or 1.5 per cent.
In the US, crucial unemployment figures are due to be released Friday, which may show a further rise in the jobless rate.
On August 27 US figures showed that the world's largest economy - which is also Europe's largest trading partner - slowed markedly in the second quarter of this year, growing by an annualized 1.6 per cent according to a downwardly-revised government.
A pickup in manufacturing activity in the US however reported Wednesday eased fears of a double-dip recession. Markets in Asia responded strongly overnight to the news.
Reflecting still-difficult conditions in European credit however, Trichet may also extend the ECB's emergency bank lending program, which has offered practically unlimited liquidity to financial institutions in the eurozone since the credit crunch.
On August 19, Axel Weber, president of Germany's central bank and an ECB governing council member, pre-empted Thursday's meeting by calling for the emergency lending to be extended until at least early next year.
ECB keeps rates at historic low amid uncertain recovery
