The European Central Bank is likely to maintain status quo on Thursday after recent indicators signaled stabilizing economic conditions.
Following the policy meeting in Frankfurt on Thursday, the Governing Council is expected to hold the main refinancing rate at a record low 0.25 percent for a fourth month in a row. The announcement is due at 7.45 am ET.
The marginal lending facility rate is likely to be retained at 0.75 percent and the deposit facility rate is expected to remain at zero, where it has been since July 2012.
Inflation and economic sentiment readings have shown some improvement since February's rate-setting session, easing the pressure on the ECB to take action.
That said, some economists continue to look forward to some easing by the ECB, given the high unemployment in the currency bloc and falling energy prices.
After the G20 meeting in Sydney last week, ECB President Mario Draghi said he is ready to act if the outlook for prices deteriorates, although he sees no fear of deflation in the euro area.
"Only increased money market tension and/or a worsening of the inflation outlook will trigger new ECB action," ING Bank Senior Economist Carsten Brzeski said.
"Given the latest economic data and Draghi's comments last week, it is hard to see how the ECB could decide on new action this week without jeopardising the credibility of its proudly presented reaction function."
Though headline inflation came in higher-than-expected in February, at 0.8 percent, it remains well outside the ECB's target zone of 'below, but close to 2 percent'. Core inflation has moved up.
During his post-decision press conference, set to start at 8.30 am ET, Draghi is set to unveil the latest ECB staff macroeconomic projections that will give the predictions for 2016 for the first time.
In December, the inflation forecast for this year was slashed to 1.1 percent from 1.3 percent. For 2015, inflation was forecast at 1.3 percent.
The ECB staff also forecast that the Eurozone economy will expand 1.5 percent in 2015. The projection for this year was revised up to 1.1 percent from 1 percent.
Recent data has suggested that growth is slowly gaining momentum in the 18-nation economy, which grew 0.3 percent in the fourth quarter, following a 0.1 percent expansion in the previous three months.
Eurozone's private sector economy expanded at the sharpest pace in more than two-and-half years in February, and to a larger extent than estimated earlier, extending the current sequence of growth to eight months, the results of a survey by Markit Economics showed this week. Economic confidence improved for the tenth consecutive month to a 31-month high in February
However, latest lending figures failed to show any improvement, something that worries Draghi. Unemployment remains high at 12 percent.
While Draghi has ruled out any Japan-style deflation in Eurozone, he warned on Monday that the longer inflation stays at the current level, the higher the risk that it will not go back to 2 percent in any reasonable time.
Same day, International Monetary Fund Managing Director Christine Lagarde cautioned that the risk of prolonged low inflation is looming in the euro area and it could derail the fragile recovery. She sought more accommodative policies and targeted measures to address low inflation.
"So far there is no sign of classic deflation, i.e., of widespread, self-feeding, price declines," IMF's European Department Director Reza Moghadam said in a blog on March 4.
The IMF official urged the ECB to aim policies at the tasks of reversing the downward drift in inflation and forestalling the risk of a slide into deflation.
"It should thus consider further cuts in the policy rate and, more importantly, look for ways to substantially increase its balance sheet, be it through targeted LTROs or quantitative easing (public and private asset purchases)," Moghadam said.
Last week, the European Commission lowered its euro area inflation projection for this year to 1 percent from 1.5 percent. The forecast for 2015 was trimmed to 1.3 percent from 1.4 percent.
The executive arm of the EU raised its growth forecast for the euro year this year to 1.2 percent from the 1.1 percent predicted in November. The projection for 2015 was lifted to 1.8 percent from 1.7 percent.
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