ECB leaves rates at record low as Europe struggles

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Associated Press

Posted on January 10, 2013 at 6:34 AM

FRANKFURT, Germany (AP) — The European Central Bank has left its benchmark interest rate unchanged at a record low of 0.75 percent even though the economy in the euro area is in recession.

Analysts claim that any further rate cut might not necessarily help out the 17 European Union countries that use the euro. The current low ECB rates are intended to push down what banks charge businesses and consumers for borrowing. The problem now is banks and governments hurt during the financial crisis are not passing on those lower rates to customers plus cautious businesses are reluctant to borrow.

The ECB is addressing that through its offer to buy bonds in indebted countries. The offer alone has lowered borrowing costs.

ECB President Mario Draghi is to speak at a news conference later Thursday.

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