Eurozone interest rates to be kept on hold
The European Central Bank is widely expected to leave its main lending rate at 4.25 percent on Thursday despite growing signs of a sharp eurozone economic slowdown, analysts say.
The ECB will also release its latest forecasts for eurozone inflation and growth, with economists looking for signs that it is fully recognising the worsening trend.
"The bank's growth projections are likely to be distinctly lower," said Commerzbank analyst Michael Schubert.
"But because the upside risks for price stability remain high, the bank will continue to keep all its options open."
Inflation in the eurozone eased to 3.8 percent in August, down from a record 4.0 percent in July but still well above the ECB target of just below 2.0 percent.
While oil prices have come off the boil for now, there is concern that wage demands could create a second round of inflation pressures.
Eurozone economic activity is now clearly slowing however and pressure will build for the ECB to consider calls for it to loosen monetary policy, partly to help lower the value of the euro against the dollar which should help exports.
"The case for rate easing will intensify," UBS economist Sunil Kapadia forecast.
The ECB raised its main interest rate in July even though the economy contracted 0.2 percent in the second quarter -- the first time it has done so since the euro's creation in 1999 -- to ensure markets understood it was serious about fighting inflation driven by soaring energy costs.
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