The European Central Bank left interest rates unchanged today at 2 per cent as expected amid hopes of economic recovery in the euro zone.
ECB policymakers stated clearly before the meeting they considered interest rates, effectively at zero after subtracting inflation, are "stimulative" enough to support a rebound.
The decision came as little surprise to financial market analysts, who did not rule out more interest rate lowering later this year as an economic recovery still was not certain.
The ECB decision leaves the minimum bid rate on the main refinancing operations at 2 per cent, a record low for the ECB and the lowest for the 12-nation euro area in at least 40 years after a 0.50 percentage rate cut in June.
Financial markets barely moved after the decision with the euro trading at $1.0825, unchanged from before the announcement.
Certainly some inflationary pressures have emerged since the ECB last cut rates. The euro has retreated from its record highs, oil prices are topping $30 a barrel and a summer drought is pushing up food prices.
Yet business and consumer confidence is turning around, the service sector is strengthening and spending plans picking up - all fostering optimism about the outlook.
At the same time, recovery is far from secure.
Growth stagnated in the second quarter, with the euro zone's largest economies France and Germany in recession. Consumer spending remains very weak, job losses are mounting and the manufacturing sector is not yet on a solid footing.