Stuck in recession, with inflation rates tumbling and unemployment rising, the euro-zone looks set to get its first cut in interest rates in 10 months this week.
The European Central Bank has kept its main interest rate at a record low of 0.75% since July 2012 but the clamor for it to relax monetary policy is growing as data deteriorates and its peers take more aggressive action to support their economies.
Euro-zone inflation fell to 1.7% in March, comfortably below the ECB's target, and economists expect an even weaker print with the release of April numbers Tuesday.
Since the central bank's governing council last met in early April, when the ECB said it was "ready to act" if the gloom deepened, the International Monetary Fund has cut its global forecast and business surveys have signaled renewed weakness in Germany, Europe's most important economy.
Unemployment levels in struggling euro-zone states such as Greece and Spain have scaled new peaks above 27%. Over six million Spaniards are now unemployed and more than half of young workers under the age of 24 are out of work in both nations.
Some commentators believe the ECB will hold fire until it releases new forecasts for growth and inflation in June, but a narrow majority of economists surveyed by Reuters expect a cut to 0.50% when the governing council gathers in the Slovakian capital of Bratislava on Thursday.
European policymakers continue to predict a gradual recovery in output in the second half of the year but are coming under growing pressure to slow the pace of austerity and do more to improve financing conditions for banks and businesses.
Billionaire investor George Soros warned earlier this month that Germany risked sliding into a recession of its own making by insisting on a rigid policy of austerity and because ECB monetary policy was "out of sync" with the quantitative easing being pursued by other major
The International Monetary Fund and independent economists have called for the ECB to cut rates, even if the impact may be little more than symbolic because banks in countries such as Italy and Spain are still hobbled by bad debts and need to rebuild their capital.
The ECB is considering other ways of tackling the credit squeeze but has no appetite for the quantitative easing pursued by the Bank of Japan, Federal Reserve or Bank of England.
