ECB keeps interest rates at 4 pct

The European Central Bank kept its benchmark interest rate unchanged at 4.0 percent today, as expected, as it weighs a worsening inflation outlook against continued uncertainty about economic growth.
Euro zone interest rates have now been on hold for 12 months after credit market tensions derailed a tightening cycle which doubled credit costs between late 2005 and mid-2007.
All 82 economists in a Reuters poll last week had expected no change to interest rates this month, although most expect a cut later this year. This is in contrast to financial markets, which are betting on a 0.25 percentage point rise.
The ECB faces rising inflation pressures in the 15-nation euro zone, where food and energy costs pushed annual inflation back up to 3.6 percent in May, the same level as in March and the fastest pace in the ECB's history.
The ECB left its marginal lending rate, at which banks can get emergency overnight loans, at 5.0 percent and its deposit rate at 3.0 percent.