ECB Leaves Rates On Hold As Crisis Increases Pressure For Cut

German Logo of the ECB. (Photo credit: Wikipedia)

The European Central Bank left interest rates on hold as the debt crisis tightens its grip on the euro-area economy, increasing pressure on policy makers to deliver further stimulus.

ECB officials meeting in Frankfurt today kept the benchmark interest rate at a record low of 1 percent, as predicted by 49 of 60 economists surveyed by Bloomberg News. Ten forecast a quarter-point reduction and one a half-point cut. With European governments struggling to fix a crisis that’s engulfing Spain and could force Greece out of the euro, economists say the ECB may soon be forced to lower rates and introduce more liquidity support for banks.

The Group of Seven nations yesterday agreed to coordinate their response to Europe’s turmoil, which has tipped at least eight of the 17 euro-area economies into recession and damped European demand for foreign goods. ECB PresidentMario Draghi, who said last week the monetary union is “unsustainable” in its current form, could choose to withhold further stimulus until governments do more to tackle the causes of the crisis... continue to read.