European and British bank rates remain at record lows

FRANKFURT -- The European Central Bank and Bank of England left interest rates unchanged at record lows Thursday amid early signs of economic recovery. The British bank said it would expand its efforts to increase the money supply and boost growth.

The Bank of England kept its interest rate at 0.5% and the ECB left its at 1%.

Recent economic data in both the euro zone — a bloc of some 320 million people comprising nearly 17% of the world's output — and Britain have suggested early signs of an economic turnaround.

But the Bank of England indicated it was still cautious, saying it would expand its asset purchase program by 50 billion pounds to 175 billion pounds, part of its so-called quantitative easing program to stimulate growth by boosting the domestic money supply.

Increasing the supply of money in the economy can stimulate growth, but risks worsening inflation down the road. It comes on top of steep cuts in interest rates — the usual tool for boosting the economy.

In Prague, the Czech Republic's central bank cut its key interest rate by a quarter percentage point to a new record low 1.25% in efforts to help the struggling economy fight recession.

It is the lowest rate since the Czech Republic emerged from the break up of Czechoslovakia in 1993. The previous record low was 1.5% after a quarter percentage point cut in May.

The ECB's move had scant effect on the euro, which traded moderately lower against the dollar after the decision at $1.4377.

Other signs continued to point to an economic turnaround. German industrial orders saw their second consecutive strong month-on-month rise in June, advancing 4.5% and led by demand from other European countries, official figures showed Thursday.

The ECB, mindful of some signs of economic recovery, will consider European Union statistics that last week showed unemployment in the euro zone countries rose to a level not seen in a decade and consumer prices slipping more than expected. Eurostat said it estimated consumer prices fell 0.6% in July compared with the year-ago period.