BERLIN - The European Central Bank held its interest rates steady Thursday, as anticipated, following a tentative recovery for the beleaguered euro in recent days.

The ECB will continue to hold its refinancing operations as a variable rate tender with a minimum bid rate of 4.75%. The bank's Governing Council last hiked euro area borrowing costs by a quarter of a percentage point last month.

As the euro plumbed new depths below $0.83 versus the U.S. dollar only last week, some observers began to fear a nasty scenario where the ECB would have to raise rates to stem the inflationary effects of the weak currency, but would also choke off Europe's growth prospects at the same time. However, the euro has gained for the past five days, as signs of a slowing U.S. economy have begun to crop up. After the ECB's inaction Thursday, the euro was trading higher at $0.8646.

If the euro climbs even higher in coming days, pressure for more rate hikes will be lessened further. But should the currency merely stabilize at current levels, the ECB's tightening cycle may need to continue longer than would otherwise be necessary. As the euro sags, dollar-denominated goods such as oil become more expensive, raising the risk of importing inflation from abroad.

The longevity of the euro's recovery will be determined primarily by whether the U.S. economy continues to cool. But the threat of renewed intervention by the world's central banks also appears to be keeping traders from getting too down on the euro for the moment. Regardless of where the euro moves, however, many ECB watchers expect at least one more rate hike before year's end.

The ECB sets monetary policy for Germany, France, Italy, Spain, Portugal, the Netherlands, Belgium, Finland, Luxembourg, Ireland and Austria.