ECB chief signals rates firmly on hold

European Central Bank head Jean-Claude Trichet warned there are increasing risks for the Eurozone's waning economic recovery and less chance of inflation - clear signals the bank is done raising interest rates for some time.

At a news conference Thursday, Trichet offered new, gloomier economic projections after the bank's 23-member governing council left the benchmark refinancing rate unchanged at 1.5 per cent.

Pressure had risen on the bank to freeze its rate hike campaign after a turbulent summer in which worries grew that the 17-nation currency bloc's debt crisis was hurting consumers and businesses, and global growth was stalling.

Trichet said the Eurozone economy was expected "to grow moderately" but that that assessment was "subject to particularly high uncertainty and intensified downside risk."

Meanwhile, the risk of excessive inflation, which he had previously described as leaning to the upside, was now "broadly balanced."

Trichet turned aside questions about whether rates will stay on hold, saying "we are never pre-committed," but economists say the darker outlook is a sign the bank will not raise rates soon.

It controversially raised rates a quarter point in April and July, based on earlier expectations for more inflation and stronger growth.

The debt uncertainty also pushed Britain's Bank of England to leave rates unchanged on Thursday, at a record low of 0.5 per cent, although in Britain's case inflation remains stubbornly high at 4.4 per cent.

Eurozone officials are trying to contain a crisis triggered by market concerns that governments cannot handle their high debt loads.

Those fears have raised borrowing rates for financially troubled countries, to the point where Greece, Ireland and Portugal have needed bailouts from other Eurozone countries and the International Monetary Fund.

The ECB cut its growth projection for next year to 1.3 per cent from 1.7 per cent. It still sees inflation falling to 1.7 percent; last month Eurozone prices grew 2.5 per cent on an annual basis.

Trichet's usually smooth demeanour grew more animated when he was asked about widespread criticism in Germany of Eurozone rescue efforts and the opinion held by some there that it would be better to abandon the euro and return to the deutsche mark.