In Europe: ECB holds rates to balance inflation, recession fears

4 April 2012

Stagflation dilemma results in “wait-and-see stance” from ECB.

The European Central Bank held its main interest rate at 1.0 percent on Wednesday as persistently high inflation offset pressure to respond to the euro zone’s shaky economic recovery.

The ECB also said the interest rate on its deposit facility would remain at 0.25 percent, and the rate on the marginal lending facility would stay at 1.75 percent.

ECB President Mario Draghi will explain the Governing Council’s decision at a 8.30 a.m. EDT (1230 GMT) news conference.

Markets are looking for hints on how long the ECB is planning to keep its wait-and-see stance on interest rates.

They also expect Draghi to be grilled on whether the central bank has started discussing exiting from its non-standard measures, which include pushing a 1-trillion-euro wall of cash into money markets in 3-year loans.


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