September – Both the European Central Bank and the Bank of England decided to keep their benchmark interest rates at the current amount. The two major European banks are waiting to see what will happen with inflation and the economy in the coming weeks and months before making any further moves.
The benchmark rate for the Bank of England is currently at 5%, while the ECB’s main rate is at 4.25%. Bank President Jean-Claude Trichet has generally been hawkish on inflation and is looking to hold the rate down, even as some worry about the economy slowing.
In a research note, Soren Dijohn, an analyst at Danske Bank in Copenhagen, said that “If anything, we see the chance of a slightly hawkish twist as the ECB may choose to emphasize upward risks to inflation.”
The British Central Bank has kept its interest rates unchanged since April. Though the economy has shown signs of weakness, the bank has focused on keeping inflation at the government’s target of 2%. So far, inflation is at 4.4% due to higher energy and food prices. With oil prices down, the inflation outlook is improving and some analysts are hoping for rate cuts in the coming months. Right now, though, interest rates are unchanged.
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