The European Central Bank (ECB) held interest rates steady at 3.25 per cent this afternoon in a decision analysts had widely forecast based on comments by ECB President Jean-Claude Trichet in the past month.
Euro zone debt and currency markets were little changed on the news.
All 70 economists polled by Reuters last week had expected the ECB to keep rates steady this month, but to increase them to 3.5 per cent before Christmas.
Headline inflation dipped to 1.6 per cent in October, in line with the ECB's target of just below 2 per cent. But economic growth is at its strongest since 2000, leaving the central bank worried that inflation will bubble over in 2007.
In a news conference after the ECB raised rates last month, Mr Trichet said the bank would closely monitor inflation risks, and he did not dispute market expectations of a quarter percentage point increase by the end of December.
Mr Trichet said the ECB must exercise "strong vigilance" on inflation risks in the euro zone.
Mr Trichet's reintroduction of the term "strong vigilance" into his introductory statement will be seen as a signal that the ECB is preparing to raise rates again at its next monetary policy meeting on December 7th.
The decision leaves the ECB's deposit facility for banks at 2.25 per cent and the rate on the marginal lending facility for emergency overnight loans at 4.25 per cent.