The European Central Bank has decided to stop increasing interest rates, reversing a policy initiated just five months ago.
The decision was taken by the ECB's 23-member Governing Council at a meeting in Frankfurt this morning.
At a news conference ECB President Jean Claude Trichet said he saw an "enormous degree of uncertainty" surrounding both the world and eurozone economies.
"There is an enormous degree of uncertainty surrounding the global economy and the eurozone economy."
While the decision will be warmly welcomed by hard-pressed homeowners, the change of policy indicates the ECB analysis that inflation is no longer a major threat due to the weakness in economic activity across the euro zone.
Inflation is still well above the ECB target of roughly 2%, but analysts are pricing in an interest rate cut - possibly as early as next year - if the eurozone and US economies continue to falter.
Mr Trichet also said the ECB is ready to provide eurozone banks with all the liquidity they need.
Markets had been waiting to hear what he had to say about the ECB's controversial initiative of buying Italian government debt - a practice a minority governors argue goes against the bank's own monetary policy.
Investors believe the ECB has started buying smaller amounts of Italian bonds, which in turn increases the pressure on the Rome to institute tough austerity plans.
Ireland is gaining credibility - Trichet
Mr Trichet has said that Ireland is gaining in credibility and in creditworthiness "very visibly".
He said Ireland is following its agreed programme and winning market recognition.
"I see a country that is gaining credibility regularly. It has demonstrated a capacity to implement what has been decided, and is increasing its credit worthiness very visibly. We can do nothing but encourage Ireland on this path".
He said continuing on this path was "good for confidence in the country, good for confidence on the external side and for growth and job creation".
However Mr Trichet also said the ECB has not changed its view in relation to bondholders in Anglo Irish Bank.
Earlier it was reported that Minister for Finance Michael Noonan would seek to raise the issue of repaying senior bonds issued by Anglo that are neither guaranteed nor secured.
However when asked about the issue by reporters Mr Trichet said he did not understand why this issue kept cropping up.
"Do all that you can do to improve your credit worthiness, the credit worthiness of the government, and the creditworthiness of the banking sector.
"This is the reasoning, as simple as that, and I have nothing else to add at this time, and I have to say I have no information on any messsage that might be addressed to us".
