FRANKFURT (Reuters) — The European Central Bank kept interest rates steady at four percent yesterday and endorsed market expectations that a September hike is quite likely.ECB President Jean-Claude Trichet told a news conference he did not want to shake market probabilities on ECB rates. Ahead of its meeting, European government debt futures placed a two-third likelihood for a September hike to 4.25 percent and were split on rates at 4.5 percent by year end.

"No change in the present market expectations is the message of the Governing Council," Trichet told a news conference.

"It is not our intention to move the market."

This statement was somewhat of a surprise after the Governing Council in its policy statement left in place June wording that it would "monitor closely" all inflationary risks — a phrase that usually means a rate hike is at least three months away.

Many economists had expected that Trichet would ratchet up the language this month and say it was monitoring price risks "very closely" to show it was edging toward a September hike. The next step would be to say "strong vigilance".

However, Trichet appears to be keen to wean ECB watchers off code words for clues on the timing of the next rate increases, so as to avoid locking the ECB into a firm schedule. He wants investors to focus more on economic data, especially after delivering 200 basis points of tightening over 18 months.

The change in communication tactic left analysts uncertain just how strongly committed the ECB is to a September hike, given that October is also partially priced into markets.

"The ECB does not yet know whether it will move in September or October. That seems to be the major message from the ECB press conference," said Holdger Schmieding, economist at Bank of America. Trichet left no doubt, though, that he would prepare the ground well if the Governing Council wants to move in September. He said the phrase "strong vigilance" is one that "means really something" and he would find a way to communicate ECB intentions, even though it usually holds no news conference in August, when its rate meeting is held by teleconference.

"Vigilance" has preceded every rate hike in this tightening cycle.

"If I have something to say on behalf of the Governing Council I will find a nice way to say it, and I don't exclude at all a press briefing," he said.

The euro held firm at or near record highs against the dollar and yen after Trichet's remarks, and European government debt prices sank, pushing up yields on a firming expectation for September. Some analysts though were less convinced.

"We now have less confidence in our call for a September rate hike than before and acknowledge that it could be more of a toss-up between September and October," Elga Bartsch, euro-zone economist at Morgan Stanley, wrote in a note to clients.

Central bankers worldwide have signalled they are on heightened inflation watch during the current powerful global economic expansion. The Bank of England raised rates by a quarter percentage point to 5.75 percent earlier yesterday.

The euro zone economy is steaming ahead at an above-trend rate around 2.6 percent on the back of robust global demand. Unemployment has tumbled to record lows of 7 percent and lending is booming at double-digit rates.