Key European Rate Kept Steady
The European Central Bank left its benchmark short-term interest rate at 4.5% Thursday, even as reports suggest Europe’s economy is sputtering.
The ECB, which cut the key rate a quarter-point in May, is in a bind, experts say: Despite dimming growth, European inflation is rising. Cutting rates further in this environment could hurt the already weak euro currency.
The euro inched up Thursday to 85.1 U.S. cents in New York. It was worth 94 cents in January.
Meanwhile, in Britain, the pound hovered near 15-year lows versus the dollar, as Prime Minister Tony Blair swept to victory in the national elections.
Blair’s Labor Party appeared poised for a landslide win. That has hammered the pound in recent days because Blair is expected to push ahead with a referendum on joining the 12 nations that share the euro. Analysts believe that the pound’s official entry into the euro system will have to be at a lower value.
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