ECB Leaves Interest Rates Unchanged, As Expected

The European Central Bank left interest rates at 4.0 percent on Thursday, as expected, resisting a growing global bias towards monetary policy easing.

All 72 economists polled by Reuters last week expected no change to euro zone rates this month. Most also see monetary policy steady throughout 2008 as the ECB grapples with upward pressure on inflation and downside risks to economic growth.

Other central banks have already moved to shore up growth due to financial market turbulence stemming from widening fallout from the U.S. subprime mortgage crisis.

The Bank of England cut interest rates by a quarter point to 5.5 percent earlier on Thursday, while on Wednesday the Bank of Canada surprised markets with a quarter percentage point rate cut. Economists see another rate cut from the U.S. Fed Reserve on Dec. 11.

But in the euro zone, inflation rose to a 6-1/2 year high of 3.0 percent in November and the ECB is determined to prevent "second-round" knock-on effects on inflation expectations, wages and future prices of consumer goods.

ECB President Jean-Claude Trichet holds a news conference at 1330 GMT to explain the decision and economists expect him to highlight continuing risks to price stability.

New ECB staff forecasts, including the first projections for 2009, will also be released at the news conference.