The European Central Bank kept its interest rates at a record-low 1 per cent today and its head Jean-Claude Trichet is expected to caution against hopes of a speedy economic recovery.
The decision met analyst expectations to stay on hold in October for the fifth month running, with most expecting them to stay unchanged until late next year.
Financial markets were largely unchanged after the decision.
The Governing Council's Venice meeting was the second of two held annually outside its Frankfurt base and marks the first anniversary of coordinated rate cuts by major central banks in the aftermath of the Lehman Brothers collapse.
The Reserve Bank of Australia on Tuesday became the first Group of 20 central bank to raise rates after the recession hit.
While most analysts expect the next ECB rate move to be a hike, they forecast that it will not happen before the third quarter of next year. But tighter liquidity conditions may push up market rates before that, futures pricing shows.
The Bank of England also kept its rates on hold today, as was widely expected.
Attention now turns to Mr Trichet's news conference this afternnon, where he is seen confirming that current policy settings are appropriate. Markets will listen for any clues on the timing and order of the ECB's exit strategy.
Mr Trichet's comments on economic recovery will also face close scrutiny. The euro zone economy shrank by a revised 0.2 per cent in the second quarter of the year, and analysts expect it to have grown 0.3 per cent in the July-September quarter.
ECB policymakers have said the road ahead would be bumpy and Trichet is unlikely to change his tune just a month after the latest set of ECB staff economic projections.
He said a month ago the ECB sees a very gradual recovery.
Analysts are also looking forward to hearing the ECB's views on foreign exchange rates, after European policymakers expressed concern about the strong euro
The euro has gained roughly 3 per cent against the dollar since the ECB's September rate meeting and about 16 per cent in the last seven months.
Reuters