ECB's Trichet cautions against rate cut bets

(For more stories from the Tokyo G7 meeting click [G7/G8])

By Leika Kihara

TOKYO, Feb 9 (Reuters) - Investors gunning for interest rate cuts from the European Central Bank should heed this message: monetary easing was not on the agenda, ECB President Jean-Claude Trichet said on Saturday.

The central bank chief and his colleagues told fellow Group of Seven finance leaders in Tokyo that stubborn inflationary pressures persist in the 15-nation euro zone, even as credit turmoil weakens the region's growth outlook.

Against this backdrop, the ECB Governing Council held rates steady at its policy meeting on Thursday.

"We had no call for an increase of rates, but we had no call for a decrease in rates. So I would think that it is important the two messages be fully understood by observers," Trichet said when asked about the Governing Council decision and how markets reacted to it.

Financial markets firmed their expectations for a June rate cut and brought forward to September another cut, focusing on the ECB policy statement that dropped wording about pre-emptive action against inflation and warned of downside growth risks.

This brought the euro zone more in line with the United States, Canada and Britain, where central banks have lowered the cost of money in response to spreading credit turmoil that is weakening their economies.

But Axel Weber of Germany, the Bundesbank president, said after G7 meetings in Tokyo of central bankers and finance ministers that his fellow ECB Governing Council members were not about to follow suit.