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2010.07.0808:51:00UTC+00ECB Retains Key Interest Rate

The European Central Bank on Thursday left its key interest rate unchanged at a record low of 1% for the fourteenth straight month. The decision was in line with economists' expectations. The last change in the key interest rate was in May 2009, when the bank cut the rate by 25 basis points to the current level of 1%. The bank has lowered the key interest rate by a total of three and a quarter percentage points since early October 2008.

The central bank also retained its interest rate on the marginal lending facility at 1.75% and that on the deposit facility at 0.25%. A below target inflation gives room for the central bank to hold key rate for another month. Consumer price inflation in the 16-nation currency bloc eased to 1.4% in June from 1.6% in May. The ECB aims to keep inflation below, but close to 2% over the medium term.

The bank's President Jean-Claude Trichet and Vice President V?tor Const?ncio are due to hold their press conference at 8.30 am ET, in Frankfurt. Since the ECB made no change in the interest rates, the most part of the press conference is likely to devote to the bank's bond purchase programme and the completion of the covered bond purchase programme.

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