Why Europe wants to maintain low interest rates

Greek Prime Minister Antonis Samaras has cut government spending (photo:dpa)
Greek Prime Minister Antonis Samaras has cut government spending (photo:dpa)

Low rates of interest have been one of the keys to heavily-indebted European countries avoiding a default. Major economic upheaval has also required sharp tax rises and bailout programmes from the European Union. But while economies are beginning to grow again the increases are so small they inspire little confidence.

<i>The European Central Bank has hurried to reassure markets that everything will done to keep interest rates low. But why are interest rates so important to policymakers in Brussels and Frankfurt? Do they want to avert another Greek crisis which surely would explode if debt-servicing goes through the roof? Greece will probably need more cash before the end of 2014...

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