ECB leaves interest rates unchanged

The European Central Bank (ECB) has left interest rates on hold, a month after it cut rates as part of measures aimed at stimulating the eurozone.

In June, the ECB became the first major central bank to introduce negative interest rates.

The bank cut its deposit rate from zero to -0.10% and its benchmark rate from 0.25% to 0.15%.

It also said it would offer long-term loans to commercial banks at cheap rates.

The move is aimed at

encouraging banks to lend more to businesses and boost economic growth.

There had been concerns that the eurozone could slip into deflation, raising fears that consumers might spend even less because they would expect prices to fall in future months.

Figures on Monday showed inflation in the eurozone remained at 0.5% in June - within what ECB President Mario Draghi has called "the danger zone" below 1%.

Sluggish growth

Ahead of the ECB's decision, two separate surveys painted different pictures of eurozone economic activity.

Data from the Economic Cycle Research Institute (ECRI) suggested inflationary pressures in the eurozone reached a 25-month high in May.

The Eurozone Future Inflation Gauge, published by the ECRI, rose to 95.3 in May from 94.0 in April.

Lakshman Achuthan, the ECRI's chief operating officer, said the data suggested eurozone inflation was "likely to bottom out in the coming months".

But a survey from economic analysts Markit suggested eurozone businesses grew at their slowest pace for six months in June.

Business activity in France - the currency bloc's second largest economy - shrank at the fastest pace in four months, while growth in the eurozone's biggest economy, Germany, also slowed.

However, Chris Williamson, Markit's chief economist, said there were reasons for optimism despite data that on first glance made "grim reading".

He noted that Markit's survey found new orders rising at their fastest rate in three years in June, suggesting growth could accelerate in the second half of the year.

BBC Business