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Words in the News
 
Friday 09 May 2003
 
European interest rates
 
European Central Bank Monthly meetings of policy makers at Europe's two major central banks have decided to leave interest rates on hold. The cost of borrowing set by the European Central Bank for the 12 nation euro zone stays at 2.5 percent. This report from Mark Gregory.
 
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Around Europe interest rates are at their lowest levels in half a century. But businesses are pressing for even cheaper borrowing costs amid signs of continued economic weakness.

A big drop in German manufacturing announced earlier this week is cited as evidence that Europe's most important economy may even be sliding into recession. And the rise of the euro to a four year high against the dollar in currency dealing is a major worry for many European exporters.

But the region's central bankers don't appear to share this gloom. Wim Duisengerg, president of the European Central Bank, said there was insufficient data to justify a cut in rates at the present time. And he poured cold water on hopes of a cut next month saying the end of the war in Iraq had reduced the risk of future economic decline.

The ECB's decision came as a disappointment to European financial markets - share prices fell sharply - but it wasn't a surprise.

The Bank of England had been seen as much more likely to reduce rates in Britain. It didn't, probably because the pound's fall against the euro has pushed up the price of goods imported into the UK, raising the spectre of higher inflation. A rate cut could have added to that risk.
 
 
Listen Listen to the words
 
interest rates
 
the level of the cost of borrowing money expressed in percentage
 
cited
 
given, used
 
recession
 
a period when the economy of a country is not very successful
 
a four year high
 
the highest figure in four years
 
exporters
 
people or companies who sell things to other countries
 
gloom
 
a sad feeling
 
poured cold water
 
said something that reduced the hope of an achievement
 
cut
 
reduction
 
economic decline
 
the fall of a country’s money, industry and trade
 
ECB
 
short for European Central Bank
 
 
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