ECB holds interest rates at 1%

EuroThe European Central Bank (ECB) has kept Eurozone interest rates at 1% for the eighth month in a row.

The decision comes as little surprise with many economists predicting the interest rate hold.

John Busby, director, French mortgage specialists Athena Mortgages, comments, “Another month, and as predicted another hold. It’s a prudent decision, as 2010 kicks off with the European economy facing a difficult year.

“Talk of recovery is a tad premature and an interest rate hike would have sent out the wrong message. The worst of the recession may be behind us, but Europe’s economy is not out of the woods just yet. The likelihood is, that with recovery still in the balance, ECB interest rates will remain at 1% until the later part of 2010, with only small incremental rises in 2011.

“With respect to the French property market, despite the strength of the Euro, record low interest rates continue to make it a very attractive proposition at the moment. We are seeing a lot of interest in equity release mortgages and refinancing, with many investors releasing funds from their French property to pay off loans and mortgages in the UK.”

Positive data has emerged from the Eurozone with industrial production found to be growing twice as quickly as expected, however property investors still remain cautious about the future.

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