ECB leaves interest rates alone

THE European Central Bank left its main interest rate unchanged today, one month after it slashed rates by a half percentage point in the face of strong pressure to stimulate the Continent's sagging economy.

The decision was widely expected. The ECB has made only four rate cuts this year, in contrast with 10 by the US Federal Reserve and seven in Britain.

The Frankfurt-based central bank has cut rates by a half point twice since the September 11 attacks in the United States, but the struggling euro has failed to sustain a rally against the dollar.

Its main refinancing rate is widely expected to stay at 3.25% until early next year while the bank waits to determine the impact of its last cut on November 8.

'It's only four weeks since the last big cut and so far they have always delayed rate cuts at least eight weeks after a large rate cut of 50 basis points,' said Michael Schubert, chief economist at Commerzbank in Frankfurt.

In an effort to reduce the speculation and market swings that can precede ECB decisions, the bank last month decided its policy council will now discuss rates at only the first of its two regular monthly meetings.

Most economists don't expect the ECB to make any further adjustments until next year, when the bank expects to reach its main target of bringing inflation below its target ceiling of 2%, helped by falling oil prices.

On Wednesday the Bank of England monetary policy committee voted to leave UK rates unchanged at 4%.