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ECB chief signals pause in interest rate hikes

By David Mchugh

Associated Press

Published: Thursday, Sept. 8 2011 7:03 a.m. MDT

FRANKFURT, Germany — The head of the European Central Bank says there is less risk of inflation in the months ahead, a signal to the markets that the interest rate increases will probably be paused.

Bank head Jean-Claude Trichet said Thursday that inflation risks are "broadly balanced," dropping his earlier stance that the risk was to the upside.

Meanwhile, he says there are "intensified downside risks" to the economy.

Leaders in the 17-country currency union are struggling to contain a crisis over too much government debt from hurting the economy.

The bank left its key interest rate unchanged at 1.5 percent on Thursday as uncertainty grew over the economic outlook, both due to the debt crisis in the 17-country eurozone and weaker global growth.

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