Concerns over high oil prices and the impact of a huge cash boost for euro zone banks will keep European Central Bank interest rates at 1.0 percent until deep into 2013, a Reuters poll of economists showed on Thursday.
The poll shows a dramatic turn around from two weeks ago, when most of those surveyed said the bank would cut rates for a third time by the middle of this year.
They said central banks in both Britain and the euro zone would lie low while they see how and if the hundreds of billions of euros and pounds pumped into the financial sector over the last few months will help the economy.
Since the last round of polls, banks have siphoned 530 billion euros (443 billion pounds) of cheap three-year funds from the ECB, fuelling hope credit will start flowing through to the real economy while lowering borrowing costs for governments hit by the euro zone debt crisis.
But the measures, which on the ECB's part have now pumped more than a trillion euros into banks since December, have also awakened concerns over the likely impact on prices down the line.
The poll was conducted before Thursday's news that euro zone inflation bucked the recent trend to rise in February. Still, only five economists out of 74 surveyed this week expected the ECB to announce a 25 basis point interest rate cut at its meeting next Thursday.
The chances of another cut in rates have ebbed over the past month and it looks unlikely that any action will be taken next week, said Philip Shaw, chief economist at Investec.
The ECB has already noted further signs of stabilisation in the economy and to complicate the picture, economic disparities appear to be widening.
There are still plenty of signs that the euro zone's most indebted states are heading into recession and business surveys on Thursday showed German factory activity also barely expanded last month.
But tensions in world oil supplies have helped keep crude prices far above $100 a barrel, complicating the economic picture for central banks. Data on Thursday showed euro zone inflation inched up to 2.7 percent in February, still some way above the target ceiling of close to 2 percent.
There are also increasing signs ECB hardliners are pushing back against a dramatic loosening of lending policy, concerned about risks stemming from the wave of cash unleashed into the euro zone financial system.
There is room for lower rates, said Silke Tober from the Macroeconomic Policy Institute in Duesseldorf.
However, as a concession to the German members of the Board, the main refinancing rate will probably stay at 1 percent, with other liquidity measures such as the long-term refinancing operations pushing money market rates down further.
Reflecting the scale of the uncertainty, of the 52 contributors who had a view on the ECB's next move, 28 expected a rate cut and 24 expected a hike.
Economists also thought that the ECB would revise down its forecasts for euro zone gross domestic product growth in 2012 and bump up the inflation outlook in its latest staff projections, due next week.
December's staff projections showed GDP in a -0.4 percent to +1.0 range this year, which seems very optimistic compared with the latest Reuters consensus for a 0.4 percent decline this year.
After entering recession in Q4 2011, euro zone growth forecasts will have to be revised down due to the base effect, predicted Christian Schulz, senior economist at Berenberg Bank.
The mid-point of the forecast could move from modestly positive 2012 growth to moderately negative growth, in line with the (European Commission's) forecasts.
It is increasingly likely that major Western central banks will refrain from more enormous liquidity or money-printing programmes, especially since U.S. Federal Reserve officials are increasingly questioning the merits of a third round of large-scale bond purchases.
The latest poll also suggested the Bank of England will refrain from expanding its asset purchase programme past 325 billion pounds of newly printed money. Economists polled on February 9 thought it would extend to 350 billion pounds.
Bank Governor Mervyn King told parliament on Wednesday that there was no hard and fast expectation there will be more quantitative easing, simply stating that the risk of setbacks will determine whether the Bank pumps more money into the economy.
Unless developments over the next two months serve to undermine the February projections, the Bank will consider no further asset purchases necessary, said Danielle Haralambous, economist at 4CAST.
She said that view was underpinned by some positive economic data recently, as well as the balance of opinion among members of the Bank's Monetary Policy Committee, some of whom considered the case for keeping policy unchanged in February.
Economists retained their view that the Bank would keep rates on hold at their record low 0.5 percent late into 2013.
(Polling by Aakanksha Bhat and Snehasish Das; Analysis by Shaloo Shrivastava; Editing by Patrick Graham)