European Central Bank (ECB) for the meeting on Thursday will keep the base interest rate unchanged at a record low - 1% per year, analysts predict, interviewed agency Bloomberg.

The fact that in June in the euro zone was recorded decline in consumer prices year on year, underlines the challenge faced by European regulators, trying to balance the need to curb deflation and its unwillingness to take additional measures to stimulate the economy out of recession, writes The Wall Street Journal.

According to preliminary data, the Statistical Office of the EU, consumer prices in the region declined in June at 0.1% compared to the same month of 2008. The annual deflation in the region recorded the first time since the beginning of tracking such data in 1996.

The June decline in prices was largely due to falling energy costs compared to the same month the previous year, but the continued weakness of the economy also played a role.

ECB seeks to keep inflation at a level slightly less than 2%. Management previously warned that reducing the cost of oil could lead to the fall in consumer prices. Currently, the bank continues to believe that deflation, which includes long-term decline in prices and wages is unlikely. Nevertheless, some analysts said that the risk of deflation increases.

Statdannye on the European economy is still talking about her weak condition, despite some positive signs. Unemployment in Germany rose in June to 8.3% from 8.2% in May. Government subsidies for employees of German companies have helped to curb the rise in unemployment, but economists warn that the decline in global demand will provoke massive lay-offs, which will lead to an increase in unemployment above 10% by mid-2010.

In Spain, house prices fell in the first quarter of this year at 7.6% year on year, a record decline since 1995. In Ireland, which is also struggling with a crisis in housing has been a decline in GDP in the first quarter to 8.5%.

gloomy euro zone GDP data underscore the challenges facing the leadership of the ECB when determining its policies. Members of the Board Bank has repeatedly stated that it was not going to let down a key interest rate below the current level or increase credit banks, which includes the planned redemption of the assets of 60 billion euro, if the situation in the economy will not significantly deteriorate.

Analysts expect the ECB will keep rates at 1% per annum until the end of this year.

actions of the ECB lending banks a positive impact on the level of interest rates in the interbank market. On Wednesday at three-month LIBOR rate loans in the euro fell to a record low of 1.0738% per annum.

Nevertheless, the weak data on the amount of credit shows that banks have not faith in full received from the Central Bank in the real economy. According to the ECB, the growth in credit to the private sector in May slowed to 1.8% from 2.3% in April and is the minimum to begin tracking this data in 1992. This situation, according to experts, said the need for a European Central additional actions to address the risks of deflation.

The actions of the ECB, aimed at restoring the volume of lending in the region, has so far not been effective - noted economist, Royal Bank of Scotland, Jean Kyle. - We believe that the dynamics of lending will be negative until the end of the year, and this trend will continue for a long time. This is one of the reasons why the ECB will be forced to implement other programs to purchase the assets.

bet the ECB is now the highest among the world's major central banks. For example, the U.S. Federal Reserve in December last year, lowered the rate to the target range of zero to 0.25% per annum, the rate of the Bank of England is at the level of 0.5%, Bank of Japan - 0,1%.