Both the ECB and BoE keep interest rates unchanged.

Both the European Central Bank (ECB) and the Bank of England (BoE) have announced that they are keeping interest rates unchanged in an attempt to balance the of risk inflation against further economic slowdown.

Following the announcement, the BoE will publish its Inflation Report on Wednesday and it is believed that it will show that the UK economy has deteriorated since the last assessment back in February.

Analysts also indicate that the near-term inflationary pressures are also likely to have increased.

The ECB, based in Frankfurt, has decided to leave their benchmark interest rate at 4 percent, and that its president has vowed that they are not likely to cut interest rates soon.

In contrast, the Bank of England has been far more involved as they lowered rates three times since December.

However, Mervyn King, the Bank of England’s Governor, will have to write his second letter to the Chancellor with an explanation as to why inflation has risen above the 2.0 percent target rate.

The ECB has been reluctant to the follow the Federal Reserve in its constant cuts despite rising food and energy prices causing inflation run above 3 percent.

Economists have predicted that the BoE will reduce its rate again in June while the ECB’s next move will not be before September.

Story link: Both the ECB and BoE keep interest rates unchanged.