The two most important central banks in Europe left interest rates unchanged yesterday. Bloomberg reports:
The European Central Bank and the Bank of England kept interest rates unchanged today, trying to balance the risk of faster inflation against the danger that higher credit costs will drag down economic growth.
The Frankfurt-based ECB left its benchmark refinancing rate at 4 percent, as predicted by all 53 economists surveyed by Bloomberg News, and President Jean-Claude Trichet signaled it won't cut rates anytime soon. The Bank of England, which has lowered rates three times since early December, left its benchmark at 5 percent, still the highest among the Group of Seven nations.
Economic growth, though, may be faltering in Europe.
Retail sales in the euro area declined 1.6 percent in March from a year earlier, the most since at least 1995. Sales declined 0.4 percent from February.
In Germany, Europe's largest economy, industrial production fell 0.5 percent in March, manufacturing orders fell 0.6 percent and exports fell 0.5 percent.
In the UK, the National Institute of Economic and Social Research estimates that the economy grew by 0.4 percent in the three months to April. This is after data out on Wednesday showed that British manufacturing output fell 0.5 percent in March, its sharpest decline in six months. Also on Wednesday, a survey by the Nationwide building society showed that British consumer morale had fallen to its lowest level since records began four years ago while a report by REC/KPMG showed that permanent job placements fell in April for the second time in three months.