Key interest rate hit historic low of 1.50 percent

The key interest rate for the Euro was lowered by 0.5% to 1.50 percent by the European Central Bank (ECB) yesterday which brought the rate to its lowest level since the Euro was first introduced in 1999. The new rate will be applicable from March 11th.

It appears that this decision to lower key interest rates was this time not taken unanimously in the European Central Bank Council. ECB president, Jean-Claude Trichet, said in the press conference following the move that the lowering had been a “consensus decision”. From Trichets words it became also clear that a further lowering up to zero percent cannot be ruled out.

At the same time the ECB also published some corrections of their growth and inflation forecasts. Thus, for the year 2009 the ECB experts now expect the economy to shrink by between -3.2% and -2.2%. For 2010 they predict drops of between +07% and -0.7%. With regard to inflation the ECB predicts between 0.1 and 0.7% for 2009 and between 0.6% and 1.4% for the year 2010.

The Bank of England in a historic step also lowered the key interest rate for the British Pound by another 0.5% to 0.5% yesterday. GERMAN