RTTNews - As expected, the European Central Bank or ECB on Thursday left its key interest rate unchanged at a record low for the second straight month as the 16-nation economy faces its worst recession since the Second World War.

In its Governing Council meeting held in Luxembourg, the ECB kept its key interest rate, which is the rate on main refinancing operations at 1%, where it has been from May. The bank also held its interest rate on marginal lending facility unchanged at 1.75% and the rate on deposit facility at 0.25%.

In his accompanying statement, European Central Bank President Jean-Claude Trichet said that recent data releases provide further indications that economic activity over the remainder of this year is likely to remain weak but should decline less strongly than in the first quarter of 2009.

Looking ahead into next year, after a phase of stabilization, a gradual recovery with positive quarterly growth rates is expected by mid-2010, said Trichet. Available indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council's aim of keeping inflation rates below, but close to, 2% over the medium term.

Trichet insisted there is a need to intensify efforts to support potential growth in the euro area.

Given the negative impact of the financial crisis on employment, investment and the capital stock, it is crucial to accelerate the implementation of necessary structural reforms, he said

To facilitate lending to consumers last week, the ECB loaned banks 442 billion euros at one percent. Later this month, it will begin buying 60 billion euros of covered bonds.

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