12 dec 2008 ECB Rate Decision
ECB policy members held the benchmark interest rate steady at 4.25% despite the downturn in the global financial market. The central bank was widely expected to hold a neutral policy stance as inflation remains well above their desired target, but could be forced to lower borrowing costs over the coming months as the spillover effects of the credit crunch spreads throughout the global economy. Increased turmoil in the financial sector has already led governments throughout Europe to step in as the lender of last resort, and policy makers may opt to take additional steps to avoid a severe downturn in the economy. Moreover, falling commodity prices should help to lower prices pressures in the near-term, which should allow the ECB to push inflationary concerns to the backburner as fears of a recession intensify.
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