The European Central Bank kept the cost of borrowing at record lows after it met on Thursday, facing renewed pressure to prevent the bloc going into reverse including a public call from Washington to act.
With recovery stalled across many of the 18 countries that share the euro, ECB President Mario Draghi will present fresh growth and inflation forecasts from bank staff at his post-meeting news conference at 1330 GMT.
Both measures are likely to be downgraded further.
Mounting concerns about the euro zone economy were underlined by the U.S. Federal Reserve’s influential vice chair, Stanley Fischer, who said that money-printing would help Europe as it had the United States.
“If the ECB moves in that direction, it will have positive effects,” Fischer, who was Draghi’s academic mentor at university, told a newspaper in Italy.
Draghi faces considerable political obstacles to taking this step, chiefly from a reluctant Germany. Last week, Sabine Lautenschlaeger, Germany’s appointee to the ECB’s Executive Board, said now was not the time for state bond buying.
So while the ECB could extend a scheme to buy secured debt to include corporate bonds, it is unlikely it will announce any money printing to buy government bonds.
Economists, roughly half of whom expect the bank to start buying government bonds – a step that should buoy the economy when banks exchange bonds for ECB cash – have pencilled this in for the first three months of next year.