BofE, ECB keep interest rates steady

Story link: BofE, ECB keep interest rates steady

Both the Bank of England and the European Central Bank held interest rates steady on Thursday, strengthening their respective currencies.

The UK interest rate remained at 5.75 percent, as expected, and while there was no announcement of why the Bank chose to leave the rate as it is but recent comments from Bank officials indicate that worries about the rising cost of energy and the risks that poses was likely a major factor in the decision.

Meanwhile, the European Central Bank held interest rates at 4 percent, although the ECB’s president expressed continuing concerns about the possibility of inflation in the Eurozone, which analysts interpret as keeping the option open to raise rates again in the future.

After the BofE decision, sterling touched a 26-year high versus the US dollar at $2.1117 to the pound before trading at $2.1100 at just past 1 p.m. in New York, while the UK currency remained fairly steady against the euro at 69.58p and traded at ¥237.0302 in relation to the yen

Helping the pound in relation to the greenback were comments from Federal Reserve chairman Ben Bernanke, who said in testimony before Congress that the US economy will likely “slow noticeably” in the current quarter, prompting some analysts to call for another interest rate cut in the US.

In early afternoon in New York, the dollar was at $1.4682 to the euro while the yen sat at ¥112.3350 to the dollar and $1 was worth SFr1.1264.