Trichet: ECB Will Keep Interest Rates at 1.5%

In his final policy meeting as president of the European Central Bank, Jean-Claude Trichet announced that the ECB would keep rather than cut interest rates at 1.5%.

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Trichet will hold a press conference in Berlin at 2:30 p.m. local time, at which some expect he may announce the reintroduction of 12-month loans to banks, a measure the ECB last used at the end of 2009. Whether the ECB will revive its covered-bond purchase program is another issue on today’s agenda.

Borrowing costs in Italy and Spain, the euro zone’s third- and fourth-largest economies, have jumped as investors grow increasingly concerned about their public finances. On October 4, Moody’s cut Italy’s credit rating for the first time in nearly two decades on concern that its economy might be to weak to allow for any significant deficit reductions.

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