The European Central Bank has maintained monetary policy, leaving its benchmark interest rate unchanged even as inflation exceeded the official target at the end of 2010, according to Bloomberg. On Thursday, the ECB voted to keep its benchmark rate at 1%, calling that level “appropriate,” although the central bank’s President, Jean-Claude Trichet, added, “We are permanently alert” to the potential need for an interest rate increase. In December consumer prices increased at a level that exceeded the ECB target for the first time in two years.
The ECB is balancing the need to contain inflationary pressures, but the ongoing sovereign debt crisis means an interest rate increase could pose weigh heavily on debt-burdened peripheral countries. Trichet said, “We see evidence of short-term upward pressure on overall inflation,” but he opined, “Price developments will remain in line.” The ECB leader also said the situation calls for “very close monitoring of price developments,” potentially an attempt at easing the concerns of those worried about the level of inflation in the region.