Frankfurt - The European Central Bank (ECB) left on Thursday as the U.S. Federal Reserve and the Bank of England's key interest rate to a record low of 1 percent. Thus the major central banks stick to their policy of cheap money.
The low interest rate loans cheaper for consumers and businesses. In order to stimulate the economy.
All three central banks gave no indication of a date for rate increases. However, the ECB wants to turn off the money tap for the commercial banks and gradually phase out the billion-dollar cash injections. Experts expect until mid-2010 with rate hikes - which would be later than in the U.S..
Reason for the low interest rate is the financial and economic crisis. Premature rate hikes could stifle economic recovery. But it remains a double-edged sword: Rotates the Fed late for the money supply, which threatens inflation. "The uncertainties remain high," Trichet explained the lukewarm attitude of the ECB. The economic upturn is slow and inflation rates were low.
Trichet again appealed to the commercial banks to pass on the low interest rates and cheap money through loans to consumers and businesses. Financial experts, however, complain that the interest rates will not be passed on to consumers. "The banks should do their job," said the Fed chief.
This is compared to the interest of the individual banks
