The European Central Bank council is set to keep interest rates on hold when it resumes business tomorrow and either to hold fire this year or cut rates before the year-end.
The euro's recovery, cheaper oil and moderate money supply growth have eased inflationary pressures, allowing the ECB to continue its wait-and-see policy on rates, economists said.
Signs of some economic cooling in the euro zone and fears that the 10-year US economic boom could come to an abrupt end also argued against any further rate rises.
In a poll this week economists said the ECB's benchmark minimum bid rate of 4.75 per cent should remain unchanged for the next 12 months, according to the median forecast.
The central bank has insisted that despite the current slowdown, the euro economy was robust enough to withstand the dampening impact of the oil price hikes and the US slowdown, indicating that - unlike in the United States - a rate cut was not on the cards yet.
The ECB Governing Council will hold its first deliberations this year via a telephone conference and the rate decision will be announced in Frankfurt at 12.45 p.m. tomorrow.
Economists said oil prices and the euro's poor performance - for months the main source of the ECB's headaches, now were the central bank's main allies in its efforts to push euro area inflation back below its self-imposed 2 per cent threshold.
Oil prices slipped below $25 per barrel from late 2000 peaks above $35 and the euro was trading above 95 cents against the dollar, up 7 per cent since the ECB's last meeting on December 14th and more than 15 per cent above October's all-time low around $0.823.
The poll of 48 economists showed all but one were virtually certain the ECB would not move rates this week and the median forecasts was for the benchmark minimum bid rate to stay at 4.75 per cent for the next 12 months.
A small minority of analysts surveyed this week expected the ECB to tighten the monetary reins once again this year, but a sizeable group predicted lower ECB interest rates before the end of the year.
Reuters