The European Central Bank’s (ECB) president Jean-Claude Trichet has cautiously backed Greeces austerity measures, while reiterating that nations must respect the European deficit and debt limits as concerns mount over the debt woes across the periphery of the 16-nation Euro- zone.

After the ECB chief had announced that its key lending rate would remain unchanged at a record low of 1%, he stated that he was confident that Greece would "take the appropriate measures" needed to put its budget in order having run up a deficit of nearly 13% in 2009. It has vowed to cut it to 2.8% by 2012.

Trichet offered little deviation from his January assessment of the economy, indicating that the recovery was likely to proceed at a "moderate pace" but could prove "uneven”. He also stated that annual inflation is likely to remain around 1% in the near term, well below the ECBs 2% target and that medium term inflation expectations remain "firmly anchored”.