ECB set to hold rates at record low (RTE)

04 November 2011
The European Central Bank meets today in Luxembourg as the threat of deflation looms over the recession-hit euro zone.

ECB governing council members were nonetheless widely expected to leave the zone's main interest rate at an all-time low of 1% as they wait to see the effects of dramatic moves already taken.

But ECB president Jean-Claude Trichet is likely to face questions about the threat of deflation at a press conference following the rate decision.

Euro zone consumer prices fell in June for the first time since records began in 1996, a Eurostat estimate has shown. The provisional inflation figure of minus 0.1% is way below the central bank's target of just under 2%.

A broad-based decline in prices can incite households and businesses to postpone spending, suppressing activity and threatening jobs which are already being lost at an increasing rate.

Meanwhile, Sweden's central bank is to cut its key interest rate to a new record low of 0.25%, down from 0.5 percent, in a bid to boost the country's economy.