ECB and BoE leave rates unchanged

Both the ECB and BoE left interest rates unchanged on Thursday, with the former continuing a gradual exit from the crisis measures. Bloomberg reports:

European Central Bank President Jean-Claude Trichet phased out some of the emergency tools used to fight the financial crisis and said it would be inappropriate for the International Monetary Fund to give help to Greece.

Trichet said the ECB will tighten the terms of its three- month market operations next month by returning to the pre- crisis practice of offering the funds at a variable rate. In its main seven-day operations and the one-month tenders, the ECB will keep lending banks as much money as they need at its benchmark rate until at least Oct. 12. The ECB left the key rate at a record low of 1 percent today...

The Bank of England earlier today kept its bond-purchase program on hold for a second month and left its main interest rate unchanged at 0.5 percent amid a gradual economic recovery.

The ECB today lifted its economic outlook for 2011, forecasting growth of around 1.5 percent after 0.8 percent expansion this year. Trichet said inflation pressures are likely to remain “subdued.” The ECB, which tries to keep increases in prices just below 2 percent, expects inflation to average 1.2 percent in 2010 and 1.5 percent in 2011.

Meanwhile, the data from the US on Thursday were mixed. Again from Bloomberg:

Fewer Americans than expected signed contracts to purchase previously owned homes in January, indicating the extension of a tax credit is doing little to lure buyers.

The index of purchase agreements, or pending home sales, dropped 7.6 percent after a revised 0.8 percent increase in December, the National Association of Realtors announced in Washington...

Factory orders rose 1.7 percent in January, boosted by a surge in commercial aircraft bookings, according to Commerce Department data that also showed less demand for computers and machinery.

Reports from the Labor Department today showed initial jobless claims fell from a three-month high, while productivity rose in the fourth quarter. Claims dropped 29,000 last week to 469,000.

Productivity, a measure of employee output per hour, rose at a 6.9 percent annual rate in the final three months of last year. Labor costs dropped 5.9 percent, more than anticipated.