ECB tipped to leave rates at 4%

Eurozone interest rates are expected to remain unchanged at 4% following the European Central Bank's latest meeting.

The ECB has been reluctant to cut rates as high food and fuel prices pushed inflation up to a record 3.6% in March, though this eased slightly in April.

However, analysts say the ECB may cut rates later this year as there are signs that eurozone growth is slowing.

The ECB has kept interest rates at 4% since June last year despite the impact of the credit crunch.

"For now, the ECB is firmly on hold," Bank of America senior economist Holger Schmeiding said.

Euro peak?

In contrast, the US Federal Reserve has aggressively slashed its interest rate from 5.25% to 2% and the Bank of England has also been cutting UK rates.

The different approaches have sent the euro to record highs against the dollar and pound since the beginning of the year.

This has made eurozone exports more expensive and sparked criticism from some leading exporters, including plane maker Airbus.

And last month, the European Commission downgraded its forecast for eurozone growth this year, to 1.7% from its earlier prediction of 1.8%.

However, once inflation stabilises, it is thought the ECB will begin to cut interest rates, while analysts have begun to suggest that the US economy may now have turned a corner.

This drove the euro to a two-month low against the greenback on Thursday as confidence in the US currency returned.

One euro was worth $1.5285 at one point, the lowest level since 11 March.

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