The European Central Bank will resist calls to do more to fight the euro zone crisis at its meeting in Spain on Thursday, putting the onus on governments to foster growth and head off anger over a regional austerity drive.
Police mounted a heavy presence outside the Barcelona hotel where the policymakers started meeting at 0700 GMT, ahead of protests against the Spanish government's spending cuts that are supported by the ECB.
Financial markets want the central bank to step up its efforts to fight the crisis by buying Spanish government bonds to reduce borrowing costs for the country which is in recession and has unemployment that is twice Europe's average.
But ECB policymakers are more likely to praise Spain's cost-cutting drive than to announce any new policy action such as restarting the bond-buy program and it is expected to leave interest rates unchanged at a record low of one percent.
Investors will focus on whether President Mario Draghi leaves the door open to easing policy later this year if the crisis gets worse at his 1230 GMT (8.30 am EDT) news conference.
"I think the reactivation of the SMP (bond-buy program) will occur only at a point at which the situation has deteriorated significantly and I think the pressure would have to be greater than we've seen in recent weeks," said RBS economist Nick Matthews.
Read more: http://www.reuters.com/article/2012/05/03/us-ecb-rates-idUSBRE84209P20120503
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