ECB keeps key rate unchanged at 1%

The European Central Bank (ECB) today retained its key rate at 1 per cent, amid the constituent countries continuing to grapple with the economic turmoil.

Separately, the Bank of England too retained its benchmark rate at 0.5 per cent.

The ECB, which sets the rates for the countries which share the common currency euro, has decided to keep them unchanged.

The interest rate on the main refinancing operations and marginal lending facility would remain at 1 per cent and 1.75 per cent, respectively. The rate on deposit facility would be at 0.25 per cent, ECB said in a statement.

Majority of the countries in the region are mired in recession and are witnessing higher unemployment rates.

Meanwhile, the Bank of England decided to maintain the official bank rate paid on commercial bank reserves at 0.5 per cent and would also increase the size of asset purchase programme to 175 billion pounds.

"The (Monetary Policy) Committee also voted to continue with its programme of asset purchases financed by the issuance of central bank reserves and to increase its size by 50 billion pounds to 175 billion pounds," the apex bank said in another statement.

According to the Bank of England, recession in the UK appears to "have been deeper than previously thought".

"...The pace of contraction has moderated and business surveys suggest that the trough in output is close at hand... And though there are signs that credit conditions may have started to ease, lending to business has fallen and spreads on bank loans remain elevated," it added.