"Further action"

The European Central Bank on Thursday left all of its key interest rates unchanged at its regular council meeting, confounding some expectations and turning the rate-hike spotlight on its next meeting November 4. The ECB left its main money market tool, the refinancing rate, unchanged at 2.50 percent. It also left its emergency borrowing facility, the marginal lending rate, unchanged at 3.50 percent, and its overnight deposit rate at 1.50 percent. The rate decision did not come with any further announcement. The decision to leave rates unchanged confounds forecasts from a vocal minority of economists who expected the ECB to tighten amid strong money supply growth and fears that rising oil prices and an accelerating economy will spark inflation. The spotlight now turns to the next regular governing council meeting on November 4, after the release of euro-area September money supply data later next week. Some economists warn that leaving rates unchanged into 2000 risks fuelling fears that the fledgling central bank will be soft on inflation. Key debt and money markets have already priced in a 50-basis-point rise in the refi rate, analysts said. But other economists say the current low-inflation environment and concerns about economic turmoil stemming from the millennium computer bug at year-end will convince the ECB to hold off until early next year. The ECB itself signaled a clear tightening tone at its last meeting on October 7 when president Wim Duisenberg said he was waiting for further data to confirm that "further action" was needed on the ECB_s "rather accomodative" monetary stance.