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ECB, Bank of England keeps interest rates unchanged

The European Central Bank has maintained its benchmark interest rate at 0.75 per cent, Thursday.

ECB president Mario Draghi unveiled a much-awaited program to buy the government bonds of countries in the 17-member eurozone to help bring down their borrowing rates.

At a press conference Thursday after the bank’s policy meeting, Draghi said the program, called Outright Monetary Transactions, will have no set limit and be a “fully effective backstop.”

Countries that want the ECB to buy their bonds must first officially ask for help from Europe’s bailout funds and agree to “strict and effective” budget policy conditions.

The International Monetary Fund will help monitor the compliance by governments to those conditions.

Meanwhile, earlier on Thursday, the Bank of England announced it has kept its key lending rate at 0.5 per cent and decided not to increase its economic stimulus program of bond purchases.

Analysts believe there will be no move to increase the amount of bond purchases — known as quantitative easing — before November, when the most recent commitment of 50-billion pounds ($79-billion Cdn. ) is spent. The total investment in quantitative easing is now 375-billion pounds ($589-dollars Cdn.)

The Bank is also closely watching the effect of an 80-billion pounds ($126-dollars Dprogram to encourage more bank lending.

Britain has been in recession for the last three quarters. The Organization of Economic Cooperation and Development said Thursday it expected British GDP to contract by 0.7 per cent this year.