The European Central Bank (ECB) is set to leave interest rates on hold for a fourth month running today.
Economists said markets had already done the ECB's monetary tightening work for it, leaving no need to raise official interest rates from the current 4 per cent, their highest level in six years.
Money market conditions remain tight, and early indicators show that nervousness over the past six weeks has curbed both economic activity and confidence in the 13-nation euro zone.
At the same time, the euro has hit record highs against the dollar and a basket of major trading currencies, further tightening the screws on economic growth - although also helping to keep a lid on soaring oil prices.
ECB policymakers began meeting in Vienna this morning for one of their twice-yearly meetings outside the ECB's Frankfurt headquarters.
ECB President Jean-Claude Trichet will outline the reasons for the governing council's decision at 12.30pm and may point to increased downside risks to economic growth.
Economists expect the ECB to move closer to a neutral, wait-and-see stance and away from the tightening bias expressed at the last rate meeting.
But inflation has edged above the ECB's 2 per cent ceiling for the first time in a year.