Yesterday the ECB disappointed those who had been hoping for an interest rate cut . Having already raised interest rates from 1% to 1.5% this year – the caution of the ECB was predictable.
If the ECB had lowered rates so soon after they had been raised it could have been humiliating. Also – as this was the last meeting with Jean-Claude Trichet as president – he probably thought that if there is to be a change in policy – it should be the new president who will make it.
In the UK – the base rate remains at an all time low of 0.5%. Earlier this year it seemed that the Bank of England’s next move might be a rise in interest rates as inflation was taking off again.
But nine months of a stalled economy and worries about knock on effects of the Eurozone problems have put any ideas of UK interest rate rises on the back burner for now.