The European Central Bank kept its key interest rate steady at 4.25% today, despite rising pressure from the global financial crisis and weakening economic growth.
Mr Trichet delivered the Governing Council's first in-depth assessment of the latest financial market turmoil at a news conference this afternoon.
He said that the risk of higher inflation in Europe has reduced and that the Governing Council of the ECB debated the possibility of a cut in interest rates at its Monetary Council meeting in Frankfurt today.
However, Mr Trichet said that although inflation risks have been reduced they have not disappeared.
As a result they decided to leave the rate unchanged.
Mr Trichet said that the Council will continue to monitor all developments very closely in the period ahead.
There is speculation among economists that the ECB could be preparing the ground for a cut in interest rates as soon a December.
Mr Trichet praised the intervention of the Belgian and Dutch Central Banks who took a 49% stake in the troubled Fortis bank to save it from bankruptcy last week.
When asked for his reaction to the decision of the Government to issue a guarantee for the liabilities of all of the Irish banks Mr Trichet said the Irish Government did 'something that was a very hard decision to take'.
He said that the level of financial turmoil is absolutely exceptional and that there is a very high level of uncertainty.
