FRANKFURT The European Central Bank and Bank of England left interest rates unchanged Thursday at record lows amid early signs of economic recovery. The British bank said it would expand its efforts to increase the money supply and boost growth.
The Bank of England kept its interest rate at 0.5 percent and the ECB left its at 1 percent.
Recent economic data in both the euro zone - a bloc of some 320 million people comprising nearly 17 percent of the world's output - and Britain have suggested early signs of an economic turnaround.
But the Bank of England indicated it was still cautious, saying it would expand its asset purchase program by 50 billion pounds to 175 billion pounds, part of its so-called quantitative easing program to stimulate growth by boosting the domestic money supply.
Increasing the supply of money in the economy can stimulate growth, but risks worsening inflation down the road. It comes on top of steep cuts in interest rates - the usual tool for boosting the economy.
ECB president Jean-Claude Trichet will tell reporters about the bank's reasoning later at a press conference.
Earlier, in Prague, the Czech Republic's central bank cut its key interest rate by a quarter percentage point to a new record low 1.25 percent in efforts to help the struggling economy fight recession.
It is the lowest rate since the Czech Republic emerged from the break up of Czechoslovakia in 1993. The previous record low was 1.5 percent after a quarter percentage point cut in May.
The ECB's move had scant effect on the euro, which traded moderately lower against the dollar after the decision at $1.4377.
Meanwhile, other signs continued to point to an economic turnaround. German industrial orders saw their second consecutive strong month-on-month rise in June, advancing 4.5 percent and led by demand from other European countries, official figures showed Thursday.
The ECB, meanwhile, mindful of some signs of economic recovery, will consider European Union statistics that last week showed unemployment in the euro zone countries rose to a level not seen in a decade and consumer prices slipping more than expected. Eurostat said it estimated consumer prices fell 0.6 percent in July compared with the year-ago period.
Meanwhile, the office said unemployment rose to 9.4 percent in June - the highest level since June 1999 - after 9.3 percent in May.
Still, analysts anticipate the bank will keep rates on hold and not announce any new measures on "enhanced credit support," the ECB's version of quantitative easing.
"We suspect the ECB will enjoy the luxury of a relatively non-contentious get-together," Calyon Credit Agricole analysts said in a note to clients.
In May, the ECB announced it would buy euro60 billion ($86.4 billion) in covered bonds, a relatively safe way to provide markets with more cash. The program is ongoing and the ECB said earlier this week it's spent just euro4.9 billion of the allotted money so far. The bank could announce more details about the ongoing program Thursday.
