[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 6 April 2006, 11:45 GMT 12:45 UK
Euro interest rate stays at 2.5%
ECB president Jean-Claude Trichet
ECB president Jean-Claude Trichet is keeping a close watch on inflation
The European Central Bank has left its key interest rate unchanged at 2.5%.

The decision came amid signs that unemployment could be moderating, while business and investor confidence also appeared to be positive.

With inflation worries persisting in the 12-nation eurozone, economists are betting on a rise in May - with another likely to follow shortly afterwards.

But the bank's president, Jean-Claude Trichet, said these expectations did not "correspond to ECB thinking".

Still, futures trading suggests that rates could be as high as 3.25% by the end of the year.

Until December 2005, the ECB had left its rate unchanged at 2% for more than two years.

Since then, it has made two quarter-point adjustments as Europe's major economies have picked up steam.

Inflationary pressures

The eurozone's economic outlook for 2006 is mixed, but some of its largest economies, including France and Germany, are expected to gain momentum, with reports indicating that business and consumer confidence is running high.

In its last forecast the ECB predicted economic growth of 1.9% across the 12-member eurozone bloc in 2006, compared with 1.4% last year.

The ECB is tasked with keeping prices under control, and has sees its key role as ensuring that economic growth does not come at the expense of rising inflation.

Recently, the main inflationary pressure has come from sky-high energy prices.

But there are still concerns that raising eurozone rates too soon, or too aggressively, could hamper Europe's economic recovery just as it is gathering momentum.


SEE ALSO:
Euro rates up on inflation fears
02 Mar 06 |  Business
Q&A: ECB interest rate rise
02 Mar 06 |  Business
ECB to be 'vigilant' on inflation
02 Feb 06 |  Business
UK interest rates unchanged again
12 Jan 06 |  Business
ECB ignores fears to raise rates
01 Dec 05 |  Business
OECD warns on eurozone rate rise
29 Nov 05 |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific