The European Central Bank (ECB) chief Jean-Claude Trichet said Thursday it was too early to declare victory in the crisis that has gripped the 16-member eurozone economy in recent months and triggered turmoil in financial markets. Trichet's comments came after the ECB's 22-member rate-setting council left its benchmark refinancing rate unchanged at an historic low of 1 per cent, according to dpa. Speaking at his regular monthly press conference, Trichet said the bank believes that after a very good second quarter, the third quarter is already looking "better than expected". This followed signs pointing to a solid pickup in the eurozone economy and an easing in market tensions unleashed by the eurozone debt crisis. "There has been good news but let us remain prudent," the ECB chief said. "I don't declare victory," said Trichet. "We remain cautious," he said, adding that he expects the eurozone economy to be less buoyant in the second half compared with the second quarter. Despite the current economic upswing underway in the eurozone, Trichet declined to lay down plans for the ECB to resume its moves to roll back the non-conventional policy measures it has launched to boost economic confidence. "We will do what is appropriate taking in all the circumstances," he said. Trichet also went on to insist that the ECB governing council was "not signalling changes in interest rates." The problem for the Frankfurt-based ECB is orchestrating a push to exit from the non-conventional measures without jeopardizing the region's recovery. Thursday's ECB announcement followed a statement from the Bank of England that it was keeping rates on hold at an all-time low of 0.5 per cent. Rates in Britain have remained unchanged since March last year. In contrast to signs of accelerating growth in the eurozone, concerns have emerged that world economic growth could slow in the coming months. As a result, many analysts believe the ECB will keep borrowing costs on hold for possibly another year or more. Overhanging the eurozone's economic outlook are the prospects of the economic growth rate falling back in China but in particular in the US. But Trichet said: "It would be very premature to draw a negative conclusion about the US economy." Eurozone borrowing costs have been on hold since May last year as the region's economy has battled to shake off what has been dubbed the Great Recession. However, more recently robust results from Europe's industrial sector and several big banks combined with rising economic confidence have pointed to growth gaining momentum. The euro has also gained ground in recent weeks, highlighting the emergence of more stable financial markets as the fallout from this year's eurozone debt crisis continues to fade. The common currency rose to 1.3236 dollars, following the ECB's rate announcement and downbeat US jobs data. "The market is functioning a little bit better," said Trichet. The European Commission's closely watched economic sentiment indicator released last week hit a 29-month high in July, adding to evidence of improving economic growth. While the ECB's governing council was deliberating in Frankfurt, Germany's Ministry of Economics and Technology said factory orders in Europe's biggest economy surged by 3.2 per cent in June. But a rise in energy and food costs combined to drive up the eurozone's annual inflation rate to a 20-month high of 1.7 per cent in July. This pushed inflation in the currency bloc up towards the ECB's target of below, but close to, 2 per cent. Eurozone consumer prices had stood at 1.4 per cent in June. Despite a pickup in consumer prices, the ECB expects inflationary pressures to remain contained.
