The European Central Bank is all but certain to cut interest rates today to try to boost ultra-low inflation and strengthen the wobbly recovery in the 18 countries that use the euro.
Analysts say the bank might take its stimulus efforts farther and announce extraordinary steps to get credit moving to struggling businesses.
The ECB has been under pressure to act, especially after a report this week showed inflation in the eurozone dropped more than expected last month to 0.5 per cent - further evidence of a slack economy. Excessively low inflation, if it persists, could become a serious economic threat.
It could cause businesses and individuals to delay spending indefinitely as they await ever-lower prices. It could also make it harder for companies and countries to pare their heavy debt loads left over from the eurozone's financial crisis.
The ECB maintains a target inflation rate for the eurozone of just below 2 per cent. Fears have arisen that the continent's excessively low inflation could slip into deflation - an outright fall in prices. Deflation can stall an economy. It's a trap that's hard to escape, which helps explain why Mario Draghi, the ECB's president, has strongly hinted that the central bank will take unusual action this week.
