20 January 2010
The European Central Bank dismissed the prospect of any state leaving the euro zone as "absurd" as it started the new year with a signal that interest rates will remain firmly on hold. The ECB kept interest rates unchanged at a record low of 1.0 percent for the eighth month in a row and President Jean-Claude Trichet confirmed settings were appropriate for the euro zone's expected moderate recovery. He saw no inflation threats on the horizon, bolstering market expectations credit costs will stay on hold until the fourth quarter of 2010. But he fired a warning shot on public finances and took a strict line on Greece, where ballooning debt has increased investor fears of a default and is rattling confidence in the euro zone outlook. Trichet declined to comment on market expectations for rate rises later this year and said it would be no surprise if overnight market interest rates (EONIA) remained very low in coming months.