Jean Claude Trichet, president of the European Central Bank (ECB), said he remains committed to price stability in a speech at an Institute of International Finance meeting.

The news left the dollar at 1.2118 to the euro, while the single currency was at 1.4340 against the pound.

Mr Trichet said that the ECB's focus on anchoring inflation rates was still of the utmost importance to the EU economy and its policies about price stability are unchanged.

The ECB has been committed to getting inflation down to two per cent. However, the last time inflation was at this level was in 1999.

Mr Trichet said: "We are still and will continue to be credible, as we were at the first day."
 
"Our anchoring of inflationary expectations remain impeccable because markets know we are very, very serious when we are speaking of preserving and maintaining price stability."

Inflation has lowered recently to a low of 2.2 per cent this month but this is still far enough away from the ECB's target for it to be concerned.

Despite Eurozone nominal and real interest rates being at an all time low, there are still predictions that the interest rate will rise by a quarter of a percentage in May to curb future inflation.