Eurozone holds steady on interest rates

THE European Central Bank (ECB) has held steady on interest rates following speculation that the eurozone may be able to avoid a recession in the manufacturing sector.

The ECB announced its decision to maintain its interest rate at 4.5 per cent on Thursday 2 August, in a move which saw the bank place greater importance on controlling the rate of inflation than on the stimulation of domestic economic growth, due to figures showing a general increase in the service sector for the second consecutive month.

In contrast, unemployment figures from the US have defied analysts’ prediction, levelling out at 4.5 per cent for the month of July, thanks to the Federal Reserve’s proactive policy towards the reduction of interest rates.

Some have interpreted the data, released on Friday 3 August, as suggesting that the US economy could be starting to pick up, but analysts have voiced concerns, in light of these positive payroll figures, of a too-hasty return by the Federal Reserve to a more lax approach to cutting interest rates. (CL)

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