Eurozone interest rates up as expected

28 July, 2011


Both the Bank of England and European Central Bank have acted as expected in their interest rate decisions today.

The Bank of England has kept UK rates on hold at 0.5%, while European rates have been increased to 1.5% as the ECB retains its tough stance on the Greek crisis.

Both decisions were already priced in to the currency markets, with the Euro gaining strength (becoming more expensive) on the speculation in recent weeks. Investors are now more likely to hold funds in Euros rather than sterling, due to the higher rate of return, creating demand whic makes the single currency more expensive and reduced exchange rates for sending money to the Eurozone.

ECB President Trichet will now give his accompaning press conference, while we will have to wait 2 weeks for the publication of the Bank of England minutes detailing the split in voting on the decision here.