The European Central Bank has kept its main interest rate steady at a record low point of 1% after a meeting of its governing council in Venice. No change had been expected.
ECB president Jean-Claude Trichet told reporters the latest information supported the bank's view that the euro zone economy was stabilising, though uncertainty remained high and any recovery would be 'uneven'. He also said the euro zone inflation rate was expected to turn positive 'in the coming months', having been slightly negative in September.
Economists believe the bank is waiting for signs of a sustained recovery in the euro zone before unwinding a series of stimulus measures. Simon Barry of Ulster Bank noted the ECB statement that rates 'remain appropriate', saying this was a signal that there was 'very little' chance of a move in rates in the near-term.
AIB said Mr Trichet's comments suggest that the ECB is not considering changing policy 'anytime soon'. It believes it will be well into 2010 before the ECB starts hiking interest rates.
The euro zone should pull out of its first recession in the third quarter of this year after its two biggest members, Germany and France, reported growth in the second three months of the year.
But figures yesterday showed that the overall euro zone economy shrank in the second quarter by 0.2%, a bigger margin than initially thought.
