Eurozone on hold

The European Central Bank needs to take bolder action on its monetary policy, claims one senior economist...

Richard Snook, senior economist at the Centre for Economic and Business Research, made his criticism of the ECB after it voted tokeep rates at 2% lastthursday.

Mr Snook commened: "The ECB is clearly behind the curve. Global policy rates at zero and coordinated quantitative easing across all major economies is the best remedy for an unprecedented global crisis," he added.

Rates in the eurozone have been cut four times since September when they stood at 4.25%.

ECB chief Jean-Claude Trichet did not rule out the prospect of a rate cut in March, but he said zero rates were not considered "appropriate".

The ECB is trying to lift the eurozone economy, which is in recession. However, it has been more cautious in cutting rates than its counterparts in the US and UK.

The Bank of England cut rates by half a percentage point to 1% earlier on Thursday, the fifth reduction since October when UK rates stood at 5%. US interest rates are already as low as they can go.

Inflation target

Speaking at a news conference on Thursday, Mr Trichet commented: "We confirm that 2% is not the lowest level that we would have decided and secondly, zero interest rates at this moment is not something we could consider appropriate,

We are determined to "do whatever is necessary to ensure the solid anchoring of inflation expectations in line with our definition - less than two but close to 2%, and I don't exclude that we could decrease rates in our next meeting.

"We will see exactly what we have to do taking all into account... I would only say that it's clear we were not in a sustainable mode, sustainable pace at the level of the global economy during the last years and it is not something which is new because we've said that a number of times."

Source: www.bbc.co.uk