The European Central Bank appears to be waiting for the Federal Reserve to act before raising Eurozone interest rates.
The ECB did not raise rates Thursdayand there was no clear hint it will raise rates in June. It might act in July, but that calls into question whether the central bank is going to make an expected rate target of 2 percent by the end of the year.
Rates are currently at 1.5 percent after the ECB raised them in April for the first time in two years.
"With interest rates across the entire maturity spectrum remaining low, and monetary policy stance still accommodative, we’ll continue to monitor very closely developments with respect to upside risks to price stability," President Jean-Claude Trichet said at a press conference.
The key was the ECB did not use that word "vigilance" in its statement, which would trigger speculation the central bank would raise rates.
Instead, Trichet quoted Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke pretty much verbatim about their promise of the strong dollar.
Obviously the European Central Bank president will be watching the exchange rate, which has come off a bit today, as one that ultimately fights inflation and makes things tougher for the economy.
Watch Steve Liesman's one-on-one interview with ECB President Jean-Claude Trichet," Friday, May 6, on "Squawk Box, 6-9am ET