The European Central Bank left its key interest rate unchanged at 2 per cent today while keeping close watch over inflationary pressures amid building economic recovery.
The ECB decision, which was expected, leaves the benchmark main refinancing rate at its record low 2 per cent for the 19th month in a row.
High oil prices have taken a toll on the euro zone, pushing up headline inflation in December and slowing economic growth. The difficulty is compounded by a soaring euro currency that takes the steam out of the export sector but restrains price pressures.
Early indicators point to a gradual pickup in recovery in the 12-nation region in 2005 from a slump in growth late last year. Once growth has a firm foothold, analysts expect the ECB to start tightening credit to prevent future inflation problems.
ECB President Mr Jean-Claude Trichet holds a news conference at 1.30 p.m. where he can explain the ECB Governing Council's thinking on the inflationary risks ahead.
The Bank of England, also meeting today, left its key rate unchanged at 4.75 per cent as expected.