The European Central Bank has left interest rates unchanged as it waits to see what effect the war in Iraq will have on Europe's sluggish economy.
The decision by the bank's governing council at a meeting in Rome leaves the refinancing rate at 2.50 per cent, where it has been since a March 6th cut of a quarter percentage point.
The refinancing rate helps determine the cost of short-term central bank credits to commercial banks, and serves as a benchmark for other rates.
Commerzbank economist Mr Michael Schubert said a long war could mean a downward spiral, while a quick end could unleash new business activity.
The bank will wait to see how much stimulus the economy will need and when, he said. "It is an abnormal situation and therefore different from normal monetary policy analysis, and I think that's the best they can do," Mr Schubert said.
The small size of the quarter-point cut on March 6th - some observers had expected a half-point reduction - led many economists to predict the bank will cut again soon to give Europe's stagnant economy a bigger boost.
The bank must weigh the need for spurring growth with lower rates against the risk that a poorly timed cut could worsen inflation.
Fighting inflation is the bank's chief mission, and it only lowers rates when it can say prices are under control or on their way down.