European Central Bank president Jean-Claude Trichet has signalled that the bank will not raise its main interest rate again next month.
Mr Trichet was speaking to reporters in Helsinki after the bank had left its rate unchanged at 1.25%. The bank had lifted its rate by a quarter-point last month.
The ECB chief said the bank continued to see upward pressure on inflation, particularly from food and energy prices. He said the bank would 'continue to monitor very closely' all developments on prices.
Analysts were waiting to hear whether Mr Trichet would say that the council would remain 'vigilant' on inflation, a code word usually seen as signalling a rate hike in the following month. Rates are still expected to rise later in the year, however, possibly as early as July.
In the past, the ECB regularly used the 'vigilant' phrase to signal a hike was only a month away. Mr Trichet did so in March, a month before the bank raised rates for the first time in two years.
Euro zone inflation, fuelled in large part by higher oil prices, has hit 2.8% according to the latest EU estimate, forcing the ECB to raise rates even though that drives the value of the euro and makes life harder for euro zone exporters.
Mr Trichet was also asked today about remarks by former Finance Minister Brian Lenihan that Ireland was pressurised into applying for a bail-out. The ECB president Jean Claude Trichet said he would not comment on such remarks.
But he added: 'The level of commitment by the eurosystem towards Ireland had been absolutely without precedent. The level of commitment towards Ireland has absolutely no precedent. The facts speak for themselves. We are siding with Ireland In the difficult circumstances.'
Meanwhile, Mr Trichet again ruled out any idea of Greece's restructuring its debts. Asked at the ECB monthly news conference about the chances Greece might have to seek more lenient terms from its debtholders, Trichet replied: 'We consider it's not in the cards.'
Dankse Bank has provided a handy translation for ECB code words:
"Monitor closely" = 3 or 4 months to next hike
"Monitor very closely" = 2 or 3 months to next hike
"Very close monitoring" = 2 months to next hike
"Vigilance" = 1 month to next hike
"Strong vigilance" = 1 month to next hike (more certainty)
"Appropriate" = Stopping hiking cycle (despite use of monitor closely)
