The ECB kept its key rate, the refinance rate, at 4%, while the BOE maintained its rate at 5.5%.
The central banks' decision had a mixed impact on the currency markets, with the euro rising about 1 cent to $1.4737, and the pound remaining virtually unchanged versus the dollar at $1.9588.
Somewhat surprised by BOE
Currency trader Andrew Resnick, told BloggingStocks Thursday traders were somewhat surprised by the Bank of England's stand-pat decision, less so by the ECB verdict.
"Many thought the Bank of England might lower rates slightly, given the softness they're beginning to see in consumer spending and housing," Resnick said. "The ECB was not a surprise because they've been the toughest major central bank on inflation since I started trading 10 years ago."
Economic data eyed
Economist Steve Affinito told BloggingStocks Thursday he still expects the aforementioned central banks to lower their interest rates -- although perhaps not as assertively as the U.S. Federal Reserve -- as the markets receive more data on the scope and depth of the U.S. economic slowdown.
"Decoupling aside, a major economic slowdown in the U.S. will still affect Europe and the U.K. The economic downturn will undoubtedly be regional, and we're going to need accommodative monetary policy on many central bank fronts to stimulate demand," Affinito said. 'Decoupling' refers to the current economic theory which argues that the global economy can continue to grow without a growing U.S. economy; Affinito is not a decoupling adherent.
"Europe has been great so far regarding providing liquidity along with the Fed to keep markets operating, but because their economy has been stronger recently, they're understandably less accommodative regarding interest rates", Affinito said, adding that he expects that sentiment to change, as Europe receives more, softer domestic economic data in the months ahead.
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