Europe Leaves Its Key Interest Rate Unchanged

Posted October 6th, 2011 at 12:45 pm (UTC-5)
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Europe’s central bank has decided to leave its benchmark interest rate unchanged, even as the continent’s economy weakens. But its British counterpart has decided to pump more money into the economy in an effort to stave off a new recession.

The European Central Bank said Thursday it considered lowering its key lending rate of 1.5 percent, but instead decided to keep it the same for the third straight month.

The central bank, however, said it would offer new emergency loans to banks across the continent that face possible losses on Greek debt they hold if the Athens government defaults on its international financial obligations.

The Bank of England, in a surprise announcement, said it would pump another $116 billion into the British economy in an effort to stimulate the country’s growth. Britain’s economic fortunes have been stymied by the government’s austerity programs and the far-reaching effects of the European debt crisis, even though England is not part of the 17-nation bloc that uses the common euro currency.

In Greece, the government continued its efforts to impose new austerity measures to persuade its international creditors that it deserves to receive another segment of last year’s $159 billion bailout. It submitted a bill to Parliament that calls for the suspension of 30,000 government workers at reduced pay, the eventual elimination of their jobs and other austerity measures.

U.S. President Barack Obama said Thursday that European leaders must “act fast” to solve the debt crisis. He said that Greece’s financial plight is putting a “severe strain” on the world’s financial system and already having a negative effect on the U.S. economy.

He noted that some of the world’s biggest economies are meeting again in November. Mr. Obama said he hopes that by then European leaders will have a “very clear concrete plan” that is “sufficient” to resolving the world’s concerns about European governmental debt.