Today, ECB policy makers will announce interest rate for the month of September with expectations that they will leave the rate steady at 1.00% to reinforce recovery that is gathering momentum.
The economy grew in the first two quarters of the current year boosted by the introduced stimulus, improvement in household spending and the euro's depreciation.
Last month, Trichet said growth is predicted to be moderate but with uneven pace as there continues to be risks. Today, detailed preliminary GDP for the second quarter is predicted to remain unrevised with 1.0% growth on the quarter and 1.7% on the year.
Data released this week showed that economic confidence bounced in August, unemployment remained steady at 12-year high in July, and PMI manufacturing inched up to 55.1 in August from 55.0 in July.
However, analysts will await growth and inflation forecasts for the euro zone to draw picture on the economy's outlook amid the planned spending cuts as well as the euro's direction.
UK and US lowered their growth forecasts for 2010 and are still holding their interest rates at low level and keeping stimulus to boost recovery and to avoid falling into a double-dip recession.
ECB already started phasing out non-standard measures but in August Trichet did not announce any cutting in bond purchases, despite the improvement witnessed, confirming that bank's current and previous monetary actions are suitable and withdrawing stimulus may take place later on.
Alex Weber latest announcements suggested the ECB’s tightening of unlimited bank lending programs. Probably the ECB will continue their lending to banks as there are still some financial risks surrounding euro zone economies.
Yet, the high sovereign debt is still the euro area's major concern. Last week S&P downgraded Ireland while other economies such Spain may be subject to another downgrade.
Thus, even if growth forecasts increased for the current year, the ECB will probably leave interest rate unchanged till at least the end of this year to reinvigorate recovery that will be affected by the sharp austerity measures announced by euro area economies.
