Dec. 6 (Bloomberg) -- The European Central Bank left interest rates unchanged as policy makers weigh the risks of accelerating inflation against signs of slowing economic growth.

The ECB kept the benchmark refinancing rate at 4 percent today, as predicted by all 62 economists surveyed by Bloomberg News. ``Some'' members in the 19-member Governing Council voted for an increase, President Jean-Claude Trichet said. The Bank of England cut its benchmark rate to 5.5 percent from 5.75 percent.

Soaring food and energy prices have pushed inflation to the highest in more than six years, just as an appreciating euro and higher credit costs threaten to slow economic growth in the 13- nation euro region. The ECB today raised its inflation forecast for next year and signaled concern that workers would ask for more pay to compensate higher costs.

``We will do whatever is necessary to prevent any second- round effects,'' Trichet said at a briefing in Frankfurt today. That's ``essential in today's message. We're alert.''

Euro-region inflation will probably average about 2.5 percent next year instead of 2 percent projected in September, according to ECB staff forecasts published today. In 2009, inflation may slow below the bank's 2 percent limit, averaging 1.8 percent.

With unemployment at a record low, European companies may find it easier to pass on higher costs. Crude oil prices rose to a record $99.29 a barrel on Nov. 21.

Talking `Tough'

Trichet said today the ECB expects inflation to remain ``significantly'' above 2 percent in coming months before ``moderating somewhat in the course of 2008.'' In November, inflation accelerated to 3 percent, exceeding the ECB's limit for a third straight month.

With inflation ``likely to stay elevated and wage negotiations set to start soon, the ECB has to talk tough,'' said Stuart Bennett, an economist at Calyon in London. ``As long as European workers don't push for inflation-busting wage rises, the ECB should happily maintain the status quo on policy.''

The ECB shelved a planned rate increase in September and has since kept rates on hold after the U.S. housing recession made banks reluctant to lend, driving up the cost of credit. While the ECB has offered banks extra cash to encourage lending, the cost of borrowing in euros for three months jumped to a seven-year high this week.

Rate Cuts

The U.S. Federal Reserve on Oct. 31 cut its benchmark rate by a quarter-point to 4.5 percent, the second reduction in as many months, to shore up growth in the world's largest economy.

``The ECB appears to remain very much in `wait and see' mode,'' said Howard Archer, chief European economist at Global Insight Inc. in London. ``At the very least, there does not seem to be any near-term prospect of the ECB joining the ranks of central banks trimming interest rates.''

In Europe, growth is slowing more than forecast by the European Union and may drop below 2 percent in 2008 for the first time in three years, European Union Monetary Affairs Commissioner Joaquin Almunia said Dec. 4. The ECB said today it expects the economy to grow about 2 percent next year instead of 2.3 percent. In 2007, the economy probably grew around 2.6 percent, it said.

Adding to signs of a slowdown, an index of European executive and consumer confidence fell to a 20-month low in November and retail sales declined for a second month.

Deutsche Bank AG Chief Executive Officer Josef Ackermann said at an event in Zurich late yesterday the ECB should refrain from raising interest rates ``and instead think about cutting them.''

Some ECB policy makers have suggested they may support cutting interest rates. Executive Board member Jose Manuel Gonzalez-Paramo said Dec. 3 that lower borrowing costs would be justified if financial-market turmoil damped growth and inflation.

Council member Christian Noyer said Dec. 4 there's a ``question mark'' over initial hopes Europe would dodge the fallout from the U.S. housing slump. ``By any measure, we are facing a huge shock,'' he said.

``The economy will slow more than expected,'' said Jacques Cailloux, chief euro-area economist at Royal Bank of Scotland Plc in London. ``The next move will be a rate cut.''

To contact the reporter on this story: Simone Meier in Frankfurt at smeier@bloomberg.net.

Last Updated: December 6, 2007 12:13 EST