The European Central Bank (ECB) held interest rates steady at 3 per cent today following a slight easing of inflationary pressures in the euro zone.
Markets expected the ECB to wait until its October meeting before raising its benchmark rate.
Traders now await ECB President Jean-Claude Trichet's 1.30pm news conference to see whether a fifth rate increase since the tightening cycle began last December is pending. Wording that says the central bank would exercise "vigilance" over inflationary risks would confirm that view.
In a poll last week, all 61 economists said they expected no change at this meeting and for a 25 basis points rate increase to 3.25 per cent on October 5th.
Consumer inflation has eased a little in Italy and Germany, retail sales weakened in Germany, and sentiment surveys have softened around the 12-nation euro zone although they still remain at high levels.
Accordingly, analysts said the ECB can proceed on its gradual path of rate increases, despite stronger than expected GDP growth in the first half of 2006.
The decision leaves the ECB's main refinancing rate at 3 per cent after a 25-basis point rise on August 3rd.