The European Central Bank left its benchmark interest rate unchanged at 1 percent Thursday as markets waited to see if the bank will scale back special lending to banks introduced during the financial crisis.
The bank's decision to leave its rates unchanged was not a surprise. Earlier Thursday, the Bank of England announced it was keeping its interest rates at a record low of 0.5 percent and was not going to take further action on buying assets to boost its money supply.
ECB President Jean-Claude Trichet will discuss the bank's decision with reporters — though he will also likely face questions about the crisis surrounding Greece's huge budget deficit.
Greece announced austerity plans to help manage its heavy debt load Wednesday.
After Greece's announcement Wednesday, the ECB said it appreciated Athens' plan to implement the measures very quickly. It said that demonstrates the Greek government's "strong commitment" to achieve its aims.
European Commission President Jose Manuel Barroso and Luxembourg Prime Minister Jean-Claude Juncker, the head of a group of the region's finance ministers, said they were also confident that Greece could now reduce its deficit by four percentage points this year.
Greece's moves may increase chances that the European Union will guarantee its debts, making it easier for the country to sell enough bonds to help it roll over its big debts.
A Greek default or an expensive bailout would be a blow to the euro.
After the decision, the euro rose versus the dollar in spot trading Thursday afternoon to $1.3681 from $1.3661 Thursday morning. The euro traded above $1.37 Wednesday for the first time in weeks after Greece announced its budget efforts.
___
On the Net:
http://www.ecb.int
