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Eurozone rates held steady by ECB Eurozone rates held steady by ECB
(about 1 hour later)
The European Central Bank (ECB) has voted to keep eurozone interest rates on hold at 3.25% for November, a decision that was widely expected.The European Central Bank (ECB) has voted to keep eurozone interest rates on hold at 3.25% for November, a decision that was widely expected.
Analysts now expect the ECB will raise rates by one quarter of a percentage point in December, as it continues to keep a close eye on inflation.Analysts now expect the ECB will raise rates by one quarter of a percentage point in December, as it continues to keep a close eye on inflation.
Although eurozone inflation fell in October to 1.6%, the ECB has already hinted further rate rises are needed. Although eurozone inflation fell in October to 1.6%, the ECB has hinted further rate rises are needed.
It is said to be concerned that lower oil costs could refuel inflation. ECB boss Jean-Claude Trichet said "strong vigilance" remained vital.
The ECB's governing council raised interest rates by one-quarter of a percentage point last month, vowing to remain "strongly vigilant" on price inflation. 'Anchoring inflation'
It has set an inflation target of 2% or below. "Acting in a firm and timely manner to contain risks to price stability remains essential to ensure that inflation expectations are kept solidly anchored," he said.
Despite last month's inflation fall, the ECB is concerned that lower oil costs could refuel upward price pressures.
It also sees soaring German and French business and consumer confidence as a further inflationary risk.
The ECB which last raised rates last month - by one-quarter of a percentage point - has set an inflation target of 2% or below.
December's expected one-quarter of a percentage point rise to 3.5% would be the sixth increase in eurozone rates during 2006.December's expected one-quarter of a percentage point rise to 3.5% would be the sixth increase in eurozone rates during 2006.