The ECB left its main interest rate unchanged at 4 percent as expected, and Trichet avoided language which might signal a rate rise in October.
Given the high level of uncertainty, additional information is needed before further conclusions for monetary policy can be drawn, President Jean-Claude Trichet told a news conference.
The Governing Council will monitor very closely all developments ... and by acting in a firm and timely manner we will ensure that risks to price stability do not materialize, he continued.
Trichet did not describe the ECB's stance as one of strong vigilance on inflation risks, wording he used in August and which has preceded most of the rate increases in its current tightening cycle.
But he said he would use the phrase again if and when the time was right, and noted that the ECB's monetary policy was still on the accommodative side.
Economists said Trichet had retained the ECB's bias to tighten rates further, but postponing the likely date for a move until the situation is clearer on euro money markets, which have been hard hit by the U.S. subprime mortgage crisis.
The main ingredient which is lacking is confidence, Trichet said of the market mood, urging investors to keep calm.
It looks like market uncertainty has weakened the ECB's tightening bias, said Rainer Guntermann, economist at Dresdner Kleinwort. As long as the markets remain nervous or fragile and the money markets malfunction, the ECB is poised to stay on the sidelines and wait for more information how these things unfold and affect the real economy.
Euro-zone government bond prices rose after Trichet's comments as traders scaled back their expectations of an imminent ECB rate rise.
Julian Callow, chief European economist at Barclays Capital, took a similar view.
There was if anything a greater focus on uncertainty than we might have expected -- the ECB doesn't seem of a mood to raise rates in the months immediately ahead, he said.
After the rate decision, 36 out of 60 economists polled by Reuters expected the ECB to raise rates by the year's end, a slimmer majority than the 62 out of 82 in Reuters' August 30 poll.
GROWTH FUNDAMENTALS STRONG
The ECB's staff cut their forecast for 2007 growth to about 2.6 percent from 2.7 percent, due to tighter credit and higher oil prices. But Trichet said economic fundamentals for this year and next were good, and pointed to an unchanged ECB growth forecast of 2.3 percent for 2008, roughly in line with the euro zone's long-term trend growth.
Stronger growth in emerging markets should compensate for U.S. economic weakness, and euro zone sentiment and unemployment data were favorable, he said.
That said, in view of the overall potential impact of increased financial market volatility and the re-pricing of risk on the real economy, appropriate monitoring of the economy's evolution is necessary, Trichet said.
The ECB still expects inflation, currently 1.8 percent, to breach its target later in the year due to a rise in energy prices in the past 12 months, and sees wage inflation as a probable source of higher consumer prices next year.
ECB staff expect inflation to average 2.0 percent this year and next, just above target.
The needle of our compass is always price stability, Trichet said. This is all the more important at times of financial market volatility and increased uncertainty.
BUSINESS, POLITICIANS WELCOME DECISION
Europe's main employer association, BusinessEurope, praised the ECB for keeping rates on hold, and French President Nicolas Sarkozy, a frequent critic of the ECB's focus on inflation, also welcomed the decision.
This shows that as a result of talking and debating, things are moving forward a little bit, Sarkozy said.
But Trichet rejected Sarkozy's suggestion that comments from politicians had had an impact.
Everybody knows that we are fiercely independent and that there is not the slightest doubt that we decide in this totally independent mode, he said.
Trichet also said the ECB would continue to intervene in money markets to ensure orderly conditions.
We have to work to improve confidence in general. I think it is our duty and we will continue to calmly but resolutely help restoring confidence, he said.
He announced the ECB would hold an extra tender to add funds to the three-month interbank market which has been badly hit by banks' increased risk aversion, to take place on September 12.
He said the ECB had not discussed a cut to its marginal lending rate, at which banks can get emergency overnight loans, which it held steady at 5.0 percent. It also kept its deposit rate at 3.0 percent.
Earlier on Thursday, the Bank of England left its benchmark rate unchanged at 5.75 percent.
Highlighting tensions in money markets, the ECB lent banks an extra 42.2 billion euros in temporary overnight funds on Thursday after noting that money market volatility had increased, its first such emergency operation since mid-August.
(Additional reporting by Krista Hughes and David Milliken)