By Cristina Silva -
Amid threats of a Chinese slowdown, the European Central Bank voted Thursday to leave interest rates unchanged, keeping the refinancing rate at 0.05 percent and the marginal lending rate at 0.3 percent. The decision came as the world's oldest central bank - Sweden's Riksbank - also said it would leave its main interest rate unchanged.
"There are few signs of a slowdown in the Chinese economy, and the country's stock market is not so connected to the activity on the ground," the European Central Bank's vice president, Vitor Constancio, said last week.
The European Central Bank began an unprecedented stimulus program earlier this year that saw unemployment shrink and inflation back above zero. But in recent days, a slowdown in China and other emerging markets has seen a shaky stock market in Europe.
The Economist Intelligence Unit predicted bank President Mario Draghi would announce Thursday an extension of the bank's bond-buying program. ECB Executive Board Member Peter Praet said last week the bank was flexible. "The ECB is ready to expand or extend its QE [quantitative easing] program if needed, as a slump on commodity prices and risks to global growth threaten it's inflation goal of 2 percent," he said.
European investors celebrated Thursday a jump in eurozone private sector growth last month. The FTSE 100 was up by 103 points, or 1.7 percent, while Germany’s DAX grew by 1.8 percent. Howard Archer of IHS Global Insight said the eurozone should be able to achieve reasonable growth over the next year amid a Chinese slowdown.