Inflation worries keep ECB rates on hold

The European Central Bank has decided to keep euro interest rates on hold at 4.0% as rising inflation pressures in the eurozone persist.

ECB President Jean-Claude Trichet has been resisting calls from business groups to cut interest rates, claiming that the current high borrowing costs are hitting them.

High food and oil prices have pushed up the cost of essential items such as bread and petrol, bringing inflation levels to record highs.

Annual inflation in the 15-nation region hit a record high of 3.2% in January and February, which has lowered expectations that the ECB would soon follow the US and UK central banks and announce a rate cut.

A strong euro and worsening inflation would make it more difficult for the ECB to justify a rate cut in the future.