MercoPress. South Atlantic News Agency

ECB leaves Euro rates unchanged at 2%

The Governing Council of the European Central Bank, ECB, decided Thursday to keep the minimum bid rate on the main refinancing operations unchanged at 2%.

However ECB president Jean Claude Trichet left no doubt that a rise remains on the agenda after giving a cautious reading of the Euro zone outlook.

"A decrease in interest rates is not an option", said Mr. Trichet who insisted the bank was ready to counter inflationary pressures caused by strong credit growth, looser government budget policies and the rising cost of oil.

Mr. Trichet said the ECB did not discuss raising interest rates, but it remains alert to its annual inflation target below 2%. Latest data suggest that inflation could drop to the estimated levels by the end of the year following the announcement that the Euro zone growth will be close to 1,6% than 2% as originally anticipated.

"Recent data and survey indicators on economic activity have been mixed. In general they point to ongoing economic growth at a moderate pace over the short term, with no clear signs as yet of a strengthening in underlying dynamics", underlined an ECB release.

This was interpreted as suggesting that ECB needs strong evidence in the coming months that growth is consolidating before it starts removing the stimulus of record low interest rates.

Business and consumer confidence in the Euro zone has slipped in the past month as oil prices have climbed above 58 US dollars pb while the manufacturing sector virtually stalled in March even when retail and service sector data are encouraging.

"For the time being rates are on hold, and the ECB will be discussing a rate hike next June, but for the near term, it's uncertain", said Frankfurt market analysts.