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UK Cuts Rates, ECB Holds the Line

by Dave Keating | April 11, 2008 at 01:08 am

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As the Euro reaches record highs against the dollar and the pound, the European Central Bank is refusing to cut inrerest rates to slow further appreciation.

The Bank of England cut its key interest rate Thursday while the European Central Bank, faced with record inflation, kept its policy rate unchanged.

The Bank of England lowered its key rate by a quarter percentage point to 5%. Meanwhile, the ECB left its main rate at 4% for the 10th consecutive month, demonstrating that it remains focused on euro-zone inflation, which is running at a record annual rate of 3.5%.

Globally, central banks are taking widely varied approaches to combating the twin threats of slowing growth and accelerating inflation.

Much as in the U.S., U.K. money-market and mortgage rates have been rising despite central-bank cuts, as banks become increasingly reluctant to lend.

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spleinmuncher

at 15:05 on April 11th, 2008

Hi Dave,
I'm flattered that you used my photo, but please be sure to note that it includes the likely addition of Latvia, Estonia, and Lithuania to the Eurozone, which is currently not the case. I could make an updated one if you like. Thanks.

spleinmuncher has contributed a photo to this story.