The European Central Bank kept the cost of borrowing unchanged on Thursday and remains poised to announce a plan to buy government bonds with new money, its last gambit for breathing life into a euro zone economy.
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"Further monetary policy measures will be communicated by the President of the ECB at a press conference starting at 2.30 p.m. CET today," the ECB said in a statement after announcing the rate decision.
Expectations are high for the ECB to unveil large-scale quantitative easing (QE) despite opposition from Germany's Bundesbank and concerns in Berlin that it could allow spendthrift countries to slacken economic reforms.
That prospect has already prompted the Swiss central bank to abandon its cap on the franc while Denmark, whose currency is pegged to the euro, was forced to cut interest rates in anticipation of the flood of money.
A euro zone source said the ECB's Executive Board proposed buying 50 billion euros ($58 billion) of bonds per month from March.
The broader, 25-member policymaking Governing Council began meeting at 0800 GMT. ECB President Mario Draghi holds a news conference at 1330 GMT.
Former ECB policymaker Athanasios Orphanides said action was long overdue. "The ECB should have already embarked on QE," he said. "Now that the situation has deteriorated, the ECB will have to do much more."
There is uncertainty, however, about the length of the programme. While some media predicted it would run until the end of next year, it could possibly be cut short or extended depending on its impact and how much opposition it faces.
The duration is significant. A programme starting in March and running for a year would total about 600 billion euros, based on a purchase rate of 50 billion per month. If it ran until the end of 2016, it could surpass 1 trillion euros.
At Thursday's meeting, the ECB left its main refinancing rate, which determines the cost of credit in the economy, at 0.05 percent.
Euro zone inflation turned negative last month; consumer prices fell 0.2 percent, far below the ECB's target that they should rise just under 2 percent annually.
But there are doubts, and not only in Germany, over whether printing fresh money will work.
"It is a mistake to suppose that QE is a panacea in Europe or that it will be sufficient," former U.S. Treasury Secretary Larry Summers said at the World Economic Forum in Davos on Thursday.
"There is every reason to expect that QE will be less impactful in a context like the present one in Europe than it was in the context of the United States."
Scepticism runs deep among Germans and their Dutch neighbours, who fear that it will see their strong economic standing used to sponsor weaker southern states such as Portugal with cheap finance via the ECB.
Earlier this week, tensions boiled over in the Dutch parliament, where a majority of parties said they opposed quantitative easing if it would "lead to an increased risk of redistributing financial risks between euro member states".
The ECB has already cut interest rates to record lows, begun buying debt and funnelled hundreds of billions of euros in cheap loans to banks, in the hope that they would lend the money on into the economy and stimulate growth.
By buying launching into QE - as the U.S. Federal Reserve, Bank of Japan and Bank of England have before it - the ECB would show its commitment to pushing up inflation while also generating a "portfolio effect" whereby investors snap up other debt and securities, some outside the euro zone, thereby depressing the euro.
Expectations that the ECB will opt for QE are high, with the euro diving against the dollar in anticipation.
Germany is worried about the announcement, which will come just three days before an election in Greece where anti-bailout opposition party Syriza is on track to gain roughly a third of the vote.
German Chancellor Angela Merkel repeated on the eve of the meeting that any move by the ECB to buy government bonds with new money should not be used as an excuse to put economic reforms on the back burner.
Greece's finance minister urged the ECB not to exclude it from QE: "No country needs quantitative easing as much as Greece," Gikas Hardouvelis told German business daily Handelsblatt.
Draghi must balance intense market pressure to act and a need to buoy inflation with a desire to minimise German dissent on the other.
One option is for the euro zone's national central banks to bear the brunt of the risk of bond purchases, rather than the ECB itself.
Ireland's finance minister said on Monday such a ploy would make a QE plan "ineffective", yet this scenario may nonetheless be part of the final plan, sources have told Reuters.
($1 = 0.8627 euros)
(Writing by Paul Carrel; Additional reporting by Noah Barkin in Davos; Editing by David Stamp and Pravin Char)