updated 10/8/2009 9:22:24 AM ET 2009-10-08T13:22:24

The European Central Bank and the Bank of England both left their key interest rates unchanged Thursday at record lows.

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The ECB left its main refinancing rate at 1 percent while the Bank of England left its rate at 0.5 percent.

ECB President Jean-Claude Trichet told reporters after the decision that "the recovery will remain uneven, affected by balance sheet corrections in the financial and non-financial sectors in and outside the euro area."

"We have signs of stabilization. We are out of the free-fall. We have to be cautious. We have to be prudent."

Trichet said the ongoing improvement in financial markets should support credit availability, but reiterated that banks should take strengthen their capital positions and take advantage of available government programs to do so.

Trichet said the ECB would monitor the recovery and have have an exit strategy at the ready from the bank's "extraordinary measures," to provide markets with capital.

The ECB, which sets monetary policy for the 16-countries that share the euro currency — a bloc of some 320 million people — is holding its meeting in Venice, Italy, part of a twice-yearly program to visit other euro-zone countries.

In London, in addition to keeping its main interest rate unchanged at 0.5 percent, the Bank of England also held off from any further moves to expand the money supply — for now.

Both those decisions were widely expected but the Bank of England said it would keep its asset purchase program — known as quantitative easing — "under review."

At present, the BoE can buy up to 175 billion pounds ($281 billion) of financial assets, such as government bonds, from the banks. The aim of the policy is to increase the money supply in the hope that eventually the banks will start lending more to the private sector.

"The committee expects the announced program to take another month to complete. The scale of the program will be kept under review," the BoE said.

The BoE will have to decide whether a recovery is indeed under way, thus requiring no expansion of quantitative easing, or whether more stimulus is needed.

The banks' decisions come days after disappointing industrial production data for August fueled fears that the British economy won't return to growth in the third quarter.

Following the industrial data, the National Institute for Economic and Social Research, a leading independent forecaster, estimated that the British economy didn't grow in the third quarter.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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