The European Central Bank left its key interest rate unchanged at 2 per cent today to maintain its close watch over inflationary pressures as economic recovery shows fading dynamism.
Markets took the widely expected decision in their stride and now await comments on it from ECB President Mr Jean-Claude Trichet who holds a news conference later.
Analysts are widely expecting him to signal the ECB will stay on hold for many months ahead.
High oil prices are taking their toll on euro zone growth and pushing up headline inflation numbers.
The difficulty is compounded by a soaring euro currency that is taking the steam out of the export sector, though it restrains price pressures.
Politicians are starting to urge the ECB to consider an easier monetary stance to keep recovery on course and tame the euro's strength. Manufacturing output fell in Germany and Italy in November and third-quarter growth was surprisingly weak.
But Mr Trichet has consistently warned there upside risks to inflation and quashing inflationary pressures must come first.
