The European Central Bank (ECB) left its benchmark refinancing rate on hold at 4.25 per cent Thursday with ECB chief Jean-Claude Trichet warning about the threats posed by surging inflation and slowing economic growth.

"The uncertainty facing the economic outlook remains high," Trichet said in a downbeat assessment of the prospects for the world economy pointing to the risks posed by high energy costs, on-going financial market tensions and a protracted period of high inflation.

This, the ECB chief said, came amid signs that economic growth in the 15-member eurozone had weakened after the strong start of the year.

As expected, the Bank of England also left rates unchanged Thursday at 5 per cent for the fourth month in a row with the British economy hit by a pickup in inflation and slumping growth.

Thursday's decision by the ECB came after the bank fired off a warning shot at its July meeting to ward off resurgent inflation by raising borrowing costs in the eurozone by 25 basis points.

But since then while signs have emerged of a pickup in inflation, the economic gloom surrounding the eurozone has started to deepen as new grim economic numbers continue to roll in.

While industrial production in the currency bloc chalked up its biggest fall in nearly 16 years in May, retail sales reported the largest drop in 13 years in June.

At the same time, eurozone economic confidence recorded its biggest fall since the 9/11 terrorist attacks on the United States in 2001, according to a closely watched European Commission index.

This week's fall in oil prices may have helped to ease some of the pressure on the ECB and other central banks.

At 4.1 per cent, however, inflation in the eurozone is more than double the ECB's target of "close to, but just below 2 per cent."