European Central Bank President Jean-Claude Trichet stuck to his firm stance against inflation on today, showing no sign of wanting to lower interest rates yet.
Mr Trichet would not be drawn on whether he thought the worst of the financial market turmoil had passed. However, he said price stability remained the ECB's number one concern and the current steady interest rate stance would help to keep inflation in check.
"If we have maintained interest rates at the present level, it is because we believe that it corresponds to what is necessary to deliver price stability in the medium term," he told the European Parliament's Economics and Monetary Affairs Committee.
"In times of turbulence, hectic behaviour, (and a) high level of volatility, the solid presence of public institutions like central banks is decisive."
The ECB has held interest rates at 4 per cent throughout the last nine months of turmoil on financial markets, in contrast to some other major central banks which have cut them.
Euro zone inflation is at a record 3.3 per cent and Trichet said the 15-nation region's economic fundamentals were sound, noting a surprise improvement in Germany's Ifo business climate index published shortly before he began speaking.
Inflation was expected to remain significantly above the ECB's 2 per cent ceiling for most of 2008 and keeping inflation expectations in check was the top priority, he said.
His firm tone on price pressures helped to boost the euro and weakened euro zone government bonds as traders pared back expectations of cheaper credit.
Euribor rate futures are no longer fully pricing in a rate cut from the ECB, although economists polled by Reuters still see rates at 3.5 per cent by year-end.
Markets were unsettled earlier today when German banking giant Deutsche Bank warned that the global credit crisis could put its profit goal at risk.
Mr Trichet declined to say whether the worst of the volatility was over, sticking to a description he has given before of a continuing correction with periods of volatility and overshooting.