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Last Updated: Thursday, 4 May 2006, 11:45 GMT 12:45 UK
Euro interest rate stays at 2.5%
ECB president Jean-Claude Trichet
ECB president Jean-Claude Trichet has suggested a June move
The European Central Bank has voted to keep interest rates on hold at 2.5%.

Rates have now remained steady for two months following March's 0.25% rise.

Analysts expect the bank will again raise rates by a quarter of a percentage point in June to tackle any inflationary concerns.

With eurozone economies recovering in the face of high oil prices, the bank's president Jean-Claude Trichet has himself already suggested a June rise.

Analysts expect the eurozone interest rate to reach 3% before the end of the year, as inflationary pressures increase.

The latest eurozone inflation figure for April was 2.4%, above the ECB's target rate of below 2%.

"Trichet's got a tricky game to play," said Kevin Gaynor, economist at Royal Bank of Scotland.

"The economy is going through a welcome renaissance.

"But he'll be worried about rattling the sabre too hard and driving the currency past $1.28 or $1.27."

The euro has risen by 4 cents since the last ECB rate meeting, and was just below $1.26 when the decision was announced.

Rates in the eurozone are now substantially below those in the US, where the Fed has raised rates 15 times to 4.75%.

The European Central Bank sets the interest rate for the 12-nation eurozone, including France, Germany, Italy and Spain.

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