July 06, 2007	Friday	Jamadi-us-Sani 20, 1428

FRANKFURT, July 5: The European Central Bank held its key interest rates steady as expected here on Thursday, but ECB chief Jean-Claude Trichet signalled the bank might raise its key interest rates again in September or October.

As unanimously expected, the ECB held its benchmark “refi” refinancing rate steady at 4.00 per cent at a meeting here, after raising it by a quarter of a percentage point last month.

The bank, known as the guardian of the euro, also held its two other key rates -- the deposit rate and the marginal lending rate -- unchanged at 3.00 per cent and 5.00 per cent respectively.

Just 45 minutes earlier, the Bank of England raised its key rates by a quarter of a percentage point to 5.75 per cent, the highest level in more than six years.

But no rate changes had been expected from the ECB, just a month after the euro bank tightened monetary conditions in the single currency area, since the ECB has never previously raised rates at two consecutive meetings.

Speaking at the post-meeting news conference, ECB President Trichet said he “certainly has no intention to change in any respect the present expectations of the market” for a further rate hike to 4.25 per cent in September or October.

While the bank was in no way “pre-committed” to a set timetable for raising rates, tighter monetary conditions were warranted, he said.

“Our monetary policy is still on the accommodative side, with overall financing conditions favourable, money and credit growth vigorous, and liquidity in the euro area ample.” Thus, “looking ahead, acting in a firm and timely manner to ensure price stability in the medium term remains warranted.”

The ECB has raised eurozone borrowing costs a total eight times since December 2005, each time by a quarter of a percentage point, to prevent the eurozone economy, currently enjoying a robust upturn, from overheating.

The economic outlook for the region remained “favourable,” Trichet said.

“The conditions are in place for the euro area economy to continue to grow at a sustained rate.”—AFP