ECB and BoE leave rates unchanged as data turn positive

The ECB and BoE left interest rates unchanged on Thursday. Bloomberg reports:

The European Central Bank left interest rates at a record low as rising market borrowing costs and the sovereign debt crisis threaten to derail the region’s economic recovery.

Policy makers meeting in Frankfurt today kept the benchmark rate at 1 percent, as predicted by all 55 economists surveyed by Bloomberg News. Separately, the Bank of England left its key rate at 0.5 percent...

Despite concerns about the eurozone economy, European Central Bank President Jean-Claude Trichet said at a press conference in Frankfurt after the ECB policy meeting that Europe’s economy is stronger than some investors think.

Indeed, European economic reports on Thursday were quite positive.

In Germany, exports jumped 9.2 percent in May and imports surged 14.8 percent while industrial production rose 2.6 percent.

In the UK, industrial production rose 0.7 percent in May, prompting the National Institute of Economic and Social Research to estimate that GDP grew 0.7 percent in the second quarter.

But the global economy in general has done better than expected in the first half of the year, leading the IMF to now upgrade its growth forecast for this year.

... Our forecast for world growth in 2010 is about 4½ %, a bit higher than our April forecast of around 4¼ %. This revision largely reflects the stronger activity during the first half of the year. Our forecast for 2011 is broadly unchanged, at about 4¼ %.