ECB to hold rates despite oil price worry


The European Central Bank is likely to keep interest rates steady on Thursday as it sees no danger yet to euro zone inflation from fresh oil price highs and an unexpected acceleration in March consumer prices. The bank's easing cycle has come to an end as ever more signs show the 12 euro countries are set to recover, analysts said today, but it will be some time before demand stokes inflation and the bank may not raise rates before the summer.

Euro zone inflation inched up unexpectedly in March to an estimated 2.5 per cent, data showed today, in a sign high oil prices might delay inflation's retreat below the ECB's two per cent ceiling.

Analysts said that if oil prices remained at their present level inflation could still drop below the two per cent threshold in the second quarter, as the bank has forecast.