President Jean-Claude Trichet said unlimited 3-month loans would be offered to banks over the coming months and said the program to buy bonds, which aims to boost investors' confidence in government debt and help euro zone countries avoid default, would continue.

Trichet was unable, however, to specify the duration of the controversial program, which was not unanimously accepted by the ECB governing council and some fear could stoke inflation.

He said the plan, which the ECB had last month dismissed as unnecessary days before market turmoil forced it to adopt it, was not creating any long-term threats to inflation because the bank is withdrawing the longer-term liquidity.

Trichet stressed at a press conference the bond purchases "are fully consistent with our mandate and by construction temporary in nature." He emphasized the bank remains "inflexibly attached" to price stability.

To complement the bond program, the ECB said it would try to ease tensions in credit markets by offering unlimited amounts of 3-month loans.

Because of worries associated with the debt crisis, lending rates between banks have been rising in recent weeks, threatening to choke off credit to the wider economy, as occurred in 2008 after the U.S. investment bank Lehman Brothers collapsed.

"The ECB maintained a supportive stance today,» said Jennifer McKeown, senior European economist at Capital Economics. Both the short-term loans and the bond plan «certainly seem warranted," she said.

Markets remain jittery _ the euro has hit a series of four-year lows to trade below $1.19 this week — but Thursday's announcements helped the 16-country common currency rise above $1.21 from about $1.2040 earlier in the day.

The decision to keep interest rates at the record low of 1 percent was widely expected, and analysts forecast it will stay there for a while yet.

Depending on how they are done, bond purchases by a central bank can increase the supply of money in the economy, which can both stimulate growth and cause inflation, undercutting the future value of the euro.

Trichet has been at pains to point to differences between the ECB's actions and so-called quantitative easing, which the Bank of England is doing and aims to increase the amount of money in an economy to make credit more available.

"We said very clearly that we would withdraw all the liquidity that will be supplied... and you could see this withdrawal of liquidity functioning week after week," he said Thursday.

Trichet noted that «we withdraw exactly the level of liquidity we are injecting" _ 16.5 billion euros ($19.82 billion) in the first week of the program, then 10 billion euros, 5.5 billion euros and 6.5 billion euros in the subsequent weeks. Otherwise, he said, "we don't give any additional information." Immediate fears of default in Europe were averted by the European Union and International Monetary Fund's 750 billion euros ($900 billion) package of cash and state loan guarantees to protect debt-laden countries in the euro zone.

Meanwhile, the Bank of England on Thursday froze British interest rates at a record low, maintaining its wait-and-see stance ahead of the government's emergency budget later this month.

The central bank's monetary policy committee (MPC) decided to keep its key lending rate at 0.50 percent, where it has stood for 16 months, despite soaring inflation. The decision was in line with market expectations.

The bank did not alter its quantitative easing policy, under which it has pumped 200 billion pounds (243 billion euros, $292 billion) of new money into the economy, which clawed its way out of a fierce recession in late 2009.

Although recent official data showed that British 12-month inflation hit a 17-month high point in April, Bank of England Gov. Mervyn King blamed temporary factors and forecast the figure would drop this year.

Consumer Price Index (CPI) 12-month inflation, the government's target measure, hit 3.7 percent last month for the highest level since November 2008.

The BoE is tasked by the government with trying to keep the rate close to 2. percent.

Britain's biggest employers' organization, the CBI, said the Bank of England was sitting tight as it awaited more information on the fragile economic recovery.