ECB holds interest rates at 4%

The European Central Bank kept interest rates at 4 per cent today, in line with expectations that high inflation plus an uncertain economic outlook would prompt the Governing Council to stay on hold for the 10th month in a row.

Economists are now awaiting ECB President Jean-Claude Trichet's regular news conference later today when he will explain the reasons for the decision.

Euro zone inflation hit a fresh record high of 3.5 per cent in March, well above the ECB's target of just below 2 per cent.

But growth prospects are uncertain, with business activity slowing in response to months of credit market turmoil and the US economic malaise.

The ECB also held its marginal lending rate at 5 per cent and its deposit rate at 3 per cent.

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