The European Central Bank and the Bank of England both held their benchmark interest rates steady and at historic lows on Thursday, June 10.

The European Central Bank (ECB) kept its benchmark rate at just 1% against a backdrop of sizable budget deficits and high levels of public debt in Greece and a number of other European countries. The ECB’s benchmark rate has stayed at 1% for over a year, and any change to that rate was widely unexpected.

The Bank of England held its benchmark rate even lower, at a record low of 0.5% for the 16th consecutive month, as the United Kingdom continues to struggle with a weak economy and the newly elected government’s plan to make large spending cuts. The bank’s Monetary Policy Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at ?200 billion, or $290 billion.

U.S. market participants have been closely watching economic activity in Europe and the U.K. since late last year. In his speech before the U.S. House Budget Committee on June 9, Federal Reserve Chairman Ben Bernanke said the actions taken by European leaders represent a firm commitment to resolve U.S. market stresses and restore confidence

“If markets continue to stabilize, then the effects of the crisis on economic growth in the United Sates seem likely to be modest,” Bernanke said.

Analysts don’t expect any changes to ECB rates until at least 2011, even though the bank hasn’t changed rates since May 2009 and the euro is currently trading at a four-year low against the U.S. dollar of $1.19. Meanwhile, the ECB has instituted a temporary program to buy government bonds to ease the debt crisis.

March 5, 2009, was the last time the Bank of England changed rates, reducing the official rate paid on commercial bank reserves to 0.5% from 1.0%. On that same day, the bank initiated its program of buying “high-quality private sector assets,” which is designed to inject money directly into the economy in order to meet a 2% inflation target. The program has failed, however, to hold down consumer price inflation, which currently stands at 3.7%.

Read a story about the European crisis’ effect on U.S. pension plans from the archives of InvestmentAdvisor.com.