ECB maintains interest rates at 4.25%

The European Central Bank (ECB) has frozen interest rates, in line with analysts' expectations.

The European Central Bank (ECB) has frozen interest rates, in line with analysts' expectations.

ECB president Mr Wim Duisenberg had dampened speculation the US terrorist attacks would result in a cut on the cost of borrowing.

Interest rates remain unchanged at 4.25 per cent.

The attacks on the World Trade Center and the Pentagon sent European markets into freefall and wiped billions off the value of stocks.

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Economists believe that if the US Federal Reserve decided to slash interest rates for the eighth time this year in a bid to restore consumer and market confidence, the ECB might follow.

Mr Duisenberg, speaking before a European Parliament committee, also repeated that current interest rates are not standing in the way of economic growth and that the 12-nation single currency area is not facing a recession.

The ECB is now expected to wait until October before trimming interest rates, but any move would depend on inflation continuing its downward trend.

PA