The European Central Bank today kept interest rates at record lows as its president Jean-Claude Trichet said the economy in the third quarter was looking better than expected so far.
After leaving the main lending rate at 1%, ECB governors left for a summer break in an upbeat mood. Trichet told reporters that available economic data for the third quarter of the year were better than expected.
Appearing more relaxed than in recent months, Trichet said the euro zone was picking up, after surviving untold turmoil earlier this year in the fall-out from the Greek debt crisis.
'We are now ... in a situation which is obviously better than before,' Trichet said before quickly adding: 'I don't declare victory, we remain cautious.'
He also told reporters current interest rates remained 'appropriate', indicating they are not likely to rise in the near future. The main lending rate of 1% is tipped by economists to remain in place until well into 2011, or until it is clear the euro zone is on the path to sustained growth. It has been at 1% since May 2009.
Earlier, the ECB, the European Commission and the International Monetary Fund said a Greek government plan to cut its deficit and debt had made 'considerable progress in a vast array of areas'. The statement warned however that 'important challenges and risks remain' in Athens' efforts to straighten out its public finances.
The ECB meeting followed recent data showing that euro zone growth has picked up as tensions on the financial markets have eased and most big European banks demonstrated that they have enough core capital to withstand any fresh global crisis.
An ECB statement said the economy should 'grow at a moderate and still uneven pace, in an environment of uncertainty', an improvement on the previous month when it had spoken of 'high uncertainty'.
