The European Central Bank kept interest rates unchanged Thursday, insisting that the continent isn't on the brink of recession while cautioning that it was too early to assess the economic impact of the terror attacks in the United States. 

The decision was something of a surprise, since many economists had predicted the bank would cut again to offset a slowdown in the 12 countries using the euro that is widely expected to deepen after the attacks. 

ECB President Wim Duisenberg said that while growth was more sluggish than anticipated, the bank remained ``very positive'' about the strength of the economy and the retreat of inflation and saw no need to adjust its monetary policy. 

``We don't have the feeling that the euro zone is in, or on the verge of a recession,'' he told a news conference after the ECB's 18-member policy council left its main refinancing rate at 3.75 percent at a meeting in Vienna. 

He said it was ``premature'' to offer a firm assessment of the economic impact of last month's attacks and the U.S.-led campaign against international terror groups. 

For now, ``there are no major imbalances in the euro area which would require a longer-term adjustment process.'' 

The council had made a dramatic half-percentage point cut on Sept. 17, seven days after the terror attacks in the United States, joining the U.S. Federal Reserve After the bank left rates untouched at its last regular meeting two weeks ago, many economists thought it would move again to head off the threat of recession bearing down on the United States as well as Europe. 

A Dow Jones Newswires survey showed 17 of 23 economists had expected a cut. 

Jane Foley, currency strategist at Barclays Capital in London, said the bank seemed to be returning to its usual, measured approach as the air of panic after the bombings dissipates. 

``They cut aggressively with the 50-basis-point cut in September, and had also cut in August,'' she said, referring to the half-point September reduction. ``I think what they want to do is to reduce the pace.'' 

Interest rate cuts spur growth by making it cheaper for companies to borrow money and expand their operations. But they also risk driving up inflation by increasing the supply of money in the economy. The ECB says its main role is as an inflation fighter. 

Even economists who didn't predict a rate cut this time around say the bank will cut rates, probably in two reductions of a quarter-point each, by the end of the year. 

Stefan Bielmeier, senior economist at Deutsche Bank Global Markets Research in Frankfurt, Germany, said the ECB will now have time to see September price figures, as well as key French and German business confidence reports later this month that might suggest how much growth will fall. 

``They have room to cut rates,'' said Bielmeier, one of those who predicted no cut Thursday. ``It's just a matter of timing.'' 

Euro-zone inflation slowed in August to 2.7 percent from 2.8 percent the preceding month. That was well below an eight-year peak of 3.4 percent, reached in May. 

Slowing economic growth in countries such as Germany and France would generally mean less upward pressure on prices, leaving room to cut rates without causing higher prices. The bank cited that factor in its most recent rate cut. 

The euro zone economy grew only 0.1 percent in the second quarter compared to the previous three months. A recession is usually defined as two consecutive quarters of declining gross domestic product. 

The bank's policy council meets every other Thursday, usually at its Frankfurt headquarters. This week's meeting was held in Vienna as part of the bank's practice of holding two meetings on the road each year.