Britain Cuts Rate; Europe Stands Pat
The European Central Bank left its key rate unchanged on Thursday even as the Bank of England cut its benchmark interest rate for a fourth month to 1 percent.
The European bank left its benchmark rate at 2 percent after four reductions since early October but is widely expected to cut the rate at its next meeting in March. Inflation started to slow in January and the economy of the euro-region will shrink 2 percent this year, according to the International Monetary Fund.
The bank president, Jean-Claude Trichet, will discuss the decision later on Thursday. The European bank’s decision had been expected; Mr. Trichet had all but ruled out a cut after the last meeting.
“It’s just a temporary pause,” an economist at Barclays in London, Nick Matthews, said. “The deterioration we’ve seen in the real economic data and the easing of inflationary pressure indicates further easing is necessary.”