ECB expected to hold interest rates at 1%

ECB expected to hold interest rates at 1%

The European Central Bank is expected to hold interest rates at a record low of 1% later today.

Despite pressure from Germany to raise rates, the ECB are expected to keep their rates unchanged for a fourth successive month as the euro zone recovery remains fragile and concerns grow about Spain.

Germany’s Bundesbank has been leading a push for the ECB to exit from crisis measures and this has seen it loosen the rules for tapping ECB funding operations with over €1 trillion pumped into the financial system to head off a credit crunch that threatened the future of the euro late last year.

Analysts have pushed back their view on the next rate move and they now expect rates to have reached a floor at 1% and tip them to go up late next year at the earliest.

Some economists even believe that, despite pressure from the hardliners to prepare an exit strategy, the ECB will need to cut rates again later this year.

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