But Trichet's comments gave no definitive signal that the ECB is preparing to raise interest rates in December as many traders had expected, causing government bonds to rally and the euro to weaken.
However, Trichet said the upside risks to inflation had increased and that the central bank was poised to raise rates if necessary to defend price stability. "We can move at any time, and we have warned the market very clearly of this," he told a news conference after the ECB held its benchmark refinancing rate at 2 percent.
The ECB welcomed a recent improvement in euro zone economic data, citing the pick-up in an October manufacturing survey and economic sentiment polls, which confirmed its forecast for growth to accelerate to the end of this year and into 2006.
"Although economic growth has been dampened by the marked increase in oil prices over recent quarters, it appears that the euro area economy has shown considerable resilience to this shock," Trichet said.
But he warned that the economic outlook was still subject to downside risks. This could be one factor restraining the ECB from an immediate rate hike, despite the danger of inflation posed by high oil prices.
Analysts viewed the ECB's monetary policy statement as close in tone to last month's, and not nearly as hawkish as had been priced into interest rate futures markets.
"They're probably on the hunt for an opportunity to move rates if some crucial factors that would affect the inflation outlook were to change," said Rainer Guntermann, economist at Dresdner Kleinwort Wasserstein in Frankfurt.
"But for the time being, and given the high-running expectations going into the press conference, I would say he didn't prepare the markets sufficiently for a rate change in the December meeting," Guntermann added.
Euro zone government bond and interest rate futures jumped after Trichet said the ECB's monetary stance remained appropriate. His comments dampened speculation the bank was preparing the market for an interest rate rise in December.
"The market was really braced for something very hawkish from Trichet and so far he hasn't said anything that is stronger than what he has said over the past number of weeks," said Padhraic Garvey, head of investment grade strategy at ING.
At 1451 GMT, the December Euribor contract was trading 1.5 basis points higher on the day at 97.615.
The euro was trading at $1.2009, after briefly dipping below $1.20.