FRANKFURT, Sept 6: The European Central Bank and the Bank of England both held their key interest rates steady on Thursday in face of volatility on global financial markets.

The ECB and the BoE joined fellow central banks around the world in sitting tight to see how the financial market turmoil plays out into the real economy.

Australia, Brazil and Canada each froze their rates earlier this week.

The ECB, known as the guardian of the euro, held its main lending rate unchanged at 4.00 per cent at its regular monthly policy-setting meeting here, even though it had earlier been flagging a rate hike this month.

The Bank of England, too, held its borrowing costs steady at 5.75 per cent, saying it was “too soon” to judge the full economic disruption of tighter lending that has emerged owing to a collapse of the US subprime mortgage market.

That view was echoed in Frankfurt where ECB President Jean-Claude Trichet said it was “too early” to draw any conclusions about the current turbulence.

The period of “intense volatility” could in future turn out to have been a welcome corrective movement that would lead to a “better appreciation of risk,” he argued. But it might also have a real economic impact as well.

“You can’t rule out anything,” he said.—AFP