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ECB keeps lending rates intact

May 3, 2012 at 2:53 PM

FRANKFURT, Germany, May 3 (UPI) -- The European Central Bank left its overnight, bank-to-bank lending rates at 1 percent, the bank said in a statement.

The decision was widely expected. President of the ECB Mario Draghi said at a news conference that inflation rates "are likely to stay above 2 percent in 2012. "

"However, over the policy relevant horizon, we expect price developments to remain in line with price stability."

The overall economy is another matter. "Latest signals from the euro area survey data highlight prevailing uncertainty," he said.

"Available indicators for the first quarter," he added, "remain consistent with a stabilization in economic activity at a low level."

Draghi in the past has called for tighter fiscal discipline and labor reforms. On Thursday, he said, "the soundness of banks' balance sheets will be a key factor in facilitating ... (an) appropriate provision of credit to the economy."

"Facilitating entrepreneurial activities, the start-up of new firms and job creation is crucial," he said in his prepared text.

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