The European Central Bank (ECB) does not share financial markets' expectations of an interest rate rise in May, ECB President Jean-Claude Trichet said today.
His comments came after the bank held interest rates at 2.50 per cent.
But Mr Trichet left the door open for a rate rise in June, saying the central bank was watching price risks very closely, and that short-term risks to growth were now balanced, slightly stepping up the ECB's anti-inflation rhetoric.
Euribor interest rate futures shot higher and the euro fell as markets had priced in a rate rise for May.
"The present high probability which is given for an increase of rates in our next meeting does not correspond to the present sentiment of the Governing Council," Mr Trichet told a news conference.
However, Mr Trichet stressed that he was not commenting on market pricing for a June rate rise, leaving open the possibility for an increase then.
"We will continue to monitor very closely all developments to ensure that risks to price stability over the medium term do not materialise," Mr Trichet added.
After the ECB last raised rates in March, Mr Trichet simply said the ECB was monitoring price risks "closely".
Mr Trichet also said risks to economic growth were balanced in the short-term, though higher oil prices and global trade and investment imbalances posed longer term risks.
Euro zone manufacturing and business activity is at its strongest in over five years but retail and consumer spending continue to disappoint.