The European Central Bank (ECB) left interest rates unchanged at 4 per cent today as expected.
Policymakers remain concerned about rising inflation despite signs of a slowing economy.
Markets were little moved by the decision, with the euro steady around $1.4670 versus the US dollar and euro zone government bonds largely unruffled.
ECB President Jean-Claude Trichet this afternoon said the bank is prepared to act pre-emptively against "second round" price risks, however, and that anchoring inflation expectations is of the highest priority.
Policymakers are particularly concerned that hefty wage demands in countries such as Germany, the euro zone's biggest economy, may spark a wage-price spiral.
Other central banks have already started monetary easing campaigns, concerned that the financial market turbulence and the slowing US economy could jeopardise growth more than previously estimated.
The US Federal Reserve, the Bank of Canada and the Bank of England (BoE) have all cut rates to support their economies. Although the BoE left rates unchanged earlier today at 5.5 per cent, further easing is expected.