MADRID -- Having increased the euro zone's borrowing costs by a quarter of a percentage point only two weeks ago, the

European Central Bank

held its main refinancing rate at 3.5% on Thursday as expected.

Meeting away from the central bank's headquarters in Frankfurt for the first time since assuming control of Europe's monetary policy, ECB President Wim Duisenberg and the continent's other monetary authorities hope their Madrid sojourn will prove they have the entire euro area in mind while setting rates.

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Some observers had thought the ECB might hold off raising rates until coming to the Spanish capital to truly drive that point home, but the fear of increasing inflationary pressures caused the central bankers to pull the trigger on March 16. However, many ECB watchers think the next rate hike isn't too far off, coming perhaps as soon as next month.

Predicting exactly when that move may come won't be easy, since the ECB has received conflicting data recently. One of the bank's main inflationary indicators, M3 money supply growth, came in considerably higher than had been expected in February. However, union wage agreements in Germany, the region's largest economy, have been reasonably modest, helping to keep inflation in check.

Failing energy prices should also help take some of the inflationary edge off, but at the end of the day, the bank's unspoken bias clearly remains toward higher rates and the next hike is likely to come before the summer.

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