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Eurozone main interest rate held at 1.5%

The European Central Bank has maintained eurozone interest rates at 1.5 per cent, as widely expected by the market, but will extend its liquidity measures.

Jean-Claude Trichet, the president of the ECB, says the institution will maintain its existing liquidity measures through to the end of the year and will lend eurozone banks additional money for six months in a bid to stop the debt crisis from spreading.

The central bank has lifted rates twice since April, firstly by 25 basis points on April 7 and by another 25 basis points on July 7. Equally, the bank has elected to keep them unchanged twice since April, once on May 5 and again on June 9.

Both raises in the interest rate were inspired by eurozone’s inflation rate running at above the ECB’s target of 2 per cent.

Concerns over the eurozone sovereign debt crisis have been mounting this week, as Italy looks increasingly likely to face a default and yields on Spanish government bonds reached their highest levels since the introduction of the euro.

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