BERLIN -- Like the U.S.
day earlier, the
European Central Bank
held its interest rates steady as expected Thursday, signaling the euro zone's monetary authorities aren't immediately concerned about inflationary pressures.
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.
Most observers expect the ECB will have to ratchet rates higher before the year is out, but now that the euro appears to have found a bottom against the U.S. dollar after repeated foreign exchange interventions, the bank may not have to hike rates quite so high. As the euro sags, dollar-denominated goods such as oil become more expensive, raising the risk of importing inflation from abroad. After Thursday's inaction, the euro was trading lower at $0.8571.
If the battered currency begins to weaken again, the ECB will have to raise rates to stem inflation, but that could also choke growth in the euro area at the same time. Probably hoping to avoid that at all costs, the bank will likely be prepared to continue its interventions on the euro's behalf in coming weeks.
The ECB sets monetary policy for Germany, France, Italy, Spain, Portugal, the Netherlands, Belgium, Finland, Luxembourg, Ireland and Austria.