The ECB left interest rates unchanged today, playing down fears of a stumbling economic recovery and expressing confidence that inflation will gradually fall despite soaring oil prices.
But ECB President Mr Jean-Claude Trichet stressed the bank maintained its "strong vigilance" on the threat to price stability in the medium term, and analysts said an anticipated softening of his recent hawkish tone had not materialised.
"As regards economic growth, while some uncertainty has recently arisen concerning the expected strengthening of activity, the economic recovery in the euro area is ongoing," ECB President Mr Jean-Claude Trichet told a news conference.
"Looking at price developments, high oil prices have had visible direct impact on the inflation rate this year," said Mr Trichet, reading a statement issued by the ECB's Governing Council after its meeting.
But he said that so far, high oil prices had not encouraged workers to demand higher pay increases and companies to raise their prices - what the ECB calls "second round effects".
"The risk of second round effects still seems to be contained," he said. "The overall outlook remains consistent with price stability over the medium term."
As oil prices hit new records above $52 a barrel, fresh economic data show the shine already is coming off growth.
The euro zone jobless rate edged up and retail sales and German export orders fell in August, while indices tracking the manufacturing and service sectors slipped in September.
"Overall, we interpret (Trichet's) comments as being intended to pave the way for moderate tightening further down the line, said Mr Nick Kounis, economist at Fortis Bank in Amsterdam. "We are not talking about this year, of course, but probably by the first quarter of next year we'll see the first hike.
On debt markets the December Bund future extended falls to session lows on Thursday after upbeat comments on the economy by Mr Trichet. "This is a very growth-bullish speech and most people had expected a little bit of a softening in the ECB's tone and this hasn't happened," said Mr David Keeble, head of fixed income research at UBM in London.
"Trichet is certainly leaning in the direction of higher rates even though the data has been a bit weaker in the past month."