All the elements are there for bold action by the European Central Bank to fight low inflation and high unemployment at their June meeting on Thursday. <br /><br />The financial world is waiting to see what Mario Draghi and his policymakers will do to counter a slowdown in the eurozone’s recovery. <br /><br />In the first three months of the year the bloc’s economy expanded by just 0.2 percent. Analysts had expect growth to be double that. <br /><br />When compared with the same period last year, the economy grew by 0.9 percent, its second consecutive annual expansion after a 0.5 percent increase in the last quarter of 2013.<br /><br />Tom Elliott, and investment strategist with deVere Group said: “Draghi has a couple of options: sits on his hands, do nothing and watch continued stagnation in much of the eurozone periphery. But I think he will engage in something. And a number of options are available, the most obvious is to cut interest rates perhaps by 25 basis points.”<br /><br />Though there is considerable debate among economists about how much a 0.25 percent interest rate cut would help the fragile recovery.<br /><br />What growth there was in the early part of the year was in Germany (0.8 percent), while France stagnated, and output shrank in Italy, the Netherlands, Portugal and Finland.<br /><br />At the same time we learned industrial producer prices – what companies sell their goods for – fell in April for the fourth straight month, another reason for the European Central Bank to do something about the slide towards deflation. <br /><br />Eurozone inflation has been stuck in the ECB’s ‘danger zone’ of below 1.0 percent since October. Coupled with weak growth the low inflation poses a risk for the recovery.<br /><br />Draghi said last week the ECB was well equipped to get inflation back up to its target, which is just below 2.0 percent.<br /><br />with Reuters
