ECB rates unchanged as economic growth slows in Europe

Peter Jarvis, fund manager of Foreign & Colonial's Eurotrust and F&C European Dynamic fund, comments on today's decision by the European Central Bank to keep interest rates unchanged: "In line with market consensus, the Governing Council of the ECB has announced at today's meeting that interest rates will remain unchanged at 4.25%. The ECB decision is fuelled by data released last week showing that economic growth in Europe is pacing down, in particular with data from Germany and Spain being worse than consensus expectations. This is a further sign that the ‘credit crunch' has spilled over in to the wider economy and dented consumer confidence."

"On the positive side, the cooling of oil prices and other commodities in general should ease inflationary pressures, and we believe that the ECB will use monetary policy again to spur consumption in the region and probably cut interest rates later this year. On the back of a more benign inflationary backdrop, the markets have this week continued to trade off their recent lows".