ECB to keep interest rates at record low

4 July 2013

The European Central Bank (ECB) is set to leave interest rates unchanged today (4 July).

It has made the move to reassure investors who have been unsettled by the poor economic situation in the eurozone and the US Federal Reserve's plans to slow down its stimulus initiatives.

The ECB kept its key rate at the current record low of 0.5 per cent at its June meeting and Mario Draghi, ECB president, said the central bank was ready to act should the eurozone economy need to be stimulated.

Marie Diron at Ernst & Young Eurozone Forecast expects no policy moves at the July meeting.

"We do not expect any change in interest rates. However, we hope that the ECB will take into account the recent volatility in financial markets developments and in particular the rise in government bond yields in eurozone peripheral countries," she told the Agence France-Presse.

This meeting comes as Portugal falls into crisis with its benchmark bond yields rising above eight per cent. This has left uncertainty in the financial markets, which have already been left anxious after the Federal Reserve's announcement.

By Gary Cooper

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