The ECB is expected to announce a rate cut on Thursday, responding to falling inflation and worsening economic conditions. Eurozone inflation fell to 1.8% in September, while weak PMI data indicates economic stagnation.

The European Central Bank is expected to lower interest rates again this week as anxiety about inflation in the eurozone fades and concerns over sluggish growth mount.

The ECB is now overwhelmingly expected to cut the rate on its key deposit facility by 0.25 percentage points, to 3.25 per cent, at the two-day meeting in Frankfurt. But that outlook is a marked contrast to the consensus after September’s meeting.

European Central Bank Governing Council member Martins Kazaks said interest rates can be lowered next year to levels that neither stimulate nor restrict the economy — should inflation meet the 2% target.

The central bank is being bounced into easing policy faster than it wanted to — but it still isn’t throwing caution to the wind.

The European Central Bank will probably cut interest rates on Oct 17 as economic growth is weak and this raises the risk that inflation will undershoot its 2% target, French Central Bank Chief Francois Villeroy de Galhau told an Italian newspaper.

The European Central Bank will very probably lower interest rates next week and will loosen monetary policy again at future meetings depending on progress combating price rises, Governing Council member Francois Villeroy de Galhau said.

"Inflation is down but not out".

Markets are eyeing two more rate cuts from the euro area’s central bank this year amid a weak growth outlook and lower inflation.