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European banks react to subdued growth

March 8, 2012 at 1:16 PM

FRANKFURT, Germany, March 8 (UPI) -- The European Central Bank and the Bank of England left their lending rates at 1 percent and 0.5 percent, receptively, the banks said separately.

Decision makers at the BOE do not explain their decision until meeting minutes are released three weeks after a policy meeting.

At a news conference in Frankfurt, Germany, ECB President Mario Draghi said inflation would likely "stay above 2 percent in 2012" due to higher fuel prices "and indirect taxes."

"Nevertheless, we expect price developments to remain in line with price stability over the policy-relevant horizon," he said.

He said in his prepared statement economic expansion "remains subdued," avoiding the term "recession," which has shown up more frequently in economic predictions lately.

He pointed to the 0.3 percent contraction in the eurozone's economy in the fourth quarter of 2011, but then noted, "According to recent survey data, there are signs of a stabilization in economic activity, albeit still at a low level."

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