Having prevented catastrophe last year by pledging to do whatever it takes to save the euro, the European Central Bank will have to follow words with actions in 2013. While the ECB is likely to leave interest rates on hold for a sixth month at the first Governing Council Meeting of the year Thursday, the pressure for action may soon be irresistible.

A Dow Jones Newswires poll showed just four out of 44 economists expect the ECB to cut its main interest rate on Thursday, with the remainder expecting it to stay at its current record low of 0.75 percent.

“Since the December meeting, economic data have been slightly better, and financial conditions have improved further as a result of falling bond yields in peripheral countries and rising stock markets,” Barclays Capital economist Philippe Gudin said in a note to clients.

Barclays had previously forecast a cut in January but now expects rates to remain on hold, with the ECB leaving itself open to a cut in the future.

Economists are split on what will happen after the January meeting. Still, more than a third of respondents expect rates to fall to 0.5 percent by the end of March, the Down Jones Newswires survey showed.

The ECB kept rates on hold in December despite new forecasts suggesting the euro area economy will contract slightly in 2013.

Comments from ECB President Mario Draghi, saying there had been a "wide discussion" about rates, had fueled expectation shortly after December's policy meeting that the bank could cut rates further as early as January, unless there is further meaningful improvement in economic and financial sentiment. But subsequently, a number of Executive Board members have attempted to cool expectations of a rate cut this month, presumably in an orchestrated effort to keep the options open.

In an interview with the WSJ, ECB Executive Board member Peter Praet argued that there is little room to cut interest rates below the current record low of 0.75 percent and that the ECB should instead focus on making sure these rates reach the real economy.

"I believe we should continue to focus on ensuring the effectiveness of monetary policy,” Praet said in the Dec. 11 interview. “The monetary policy stance is already very accommodative. Interest rates cannot do much to address these issues.”

Asked about cutting the rate banks get for parking funds at the ECB overnight into negative territory, Praet said the ECB was "technically ready" to do so, but there were also risks.

"The experience shows you have to be careful when you go into negative rates, especially the effect on bank lending conditions. This reflection is going on," Praet said.

In a similar vein, Yves Mersch, shortly before he took up his appointment to the ECB Executive Board, told a newspaper on Dec. 17 he did not see the logic of a debate about a further rate cut from the current record low because unconventional tools were working better than conventional monetary policy.

“At the moment, we are doing monetary policy above all with unconventional measures, because these are working better,” Mersch told German paper the Frankfurter Allgemeine Zeitung. “This is why I do not really understand the discussion about a rate cut."

Another development that may stymie a rate cut this month is in the inflation arena.

Having fallen back from a peak of 3 percent in November 2011, Société Générale economist James Nixon suspects headline inflation is likely to get stuck at current levels -- the flash estimate for December was 2.2 percent -- and prove remarkably reluctant to fall below the ECB’s 2 percent objective until the second half of 2013.

Incoming Data Still Weak

Despite the small rise in economic sentiment in December, the latest batch of euro zone data still presented a decidedly downbeat picture of the state of the currency union’s economy at the end of last year.

The central bank’s actions have succeeded in calming markets and driving down government bond yields for embattled countries. The so-called economic sentiment indicator rose by 1.3 points to 87 as confidence improved among consumers and almost all business sectors. While this means the index has risen in two consecutive months for the first time since last January, there are reasons to be cautious.

Not only did the pickup a year ago prove to be just a blip in a downward trend, but, even after the latest increases, the ESI is still consistent with annual falls in euro zone gross domestic product of about 2 percent -- far below the consensus forecast of roughly flat GDP in 2013, notes Jonathan Loynes, chief European economist at Capital Economics.

Meanwhile, although the 113, 000 rise in euro zone unemployment in November was a bit smaller than those seen in the last couple of months, it still pushed the unemployment rate up to another record high of 11.8 percent. More ominously, the unemployment rate for those under 25 continued to climb, reaching 37.1 percent in November.

A separate report from Eurostat showed that retail sales fell 2.6 percent in November from a year earlier, though they gained 0.1 percent from October.

“Overall, the data provide another reminder that, while the lull in the euro zone’s debt crisis has continued, the region’s economic outlook remains very weak,” Loynes said.

Challenges In 2013

The New Year looks set to bring a series of considerable challenges for the ECB, Loynes predicts.

For a start, it is almost certain that the bank will have to put its bond purchase plan -- so-called Outright Monetary Transactions, or OMTs -- into action within the next few months.

While the mere threat of “unlimited” purchases has had a remarkably long-lasting downward effect on bond yields -- and has allowed the Spanish government to put off requesting the precautionary credit line from the European Stability Mechanism, or ESM, required to trigger the program -- Loynes remains convinced that the markets will soon test the ECB’s resolve.

“Despite President Draghi’s more recent attempts to manage market expectations lower by insisting that the ECB has responsibility for addressing only the ‘convertibility premium’ built into bond yields, the risk of disappointment is very high,” Loynes said.

The euro zone economy contracted by 0.2 percent in the second quarter of 2012 and shrank by another 0.1 percent drop in the third quarter -- making a recession, which is defined as two successive quarters of negative growth.

The second test for the ECB will be to provide the broader euro zone economy with the additional policy support. ECB staff predicted in December that euro zone GDP would contract by about 0.3 percent in 2013, but the latest activity indicators have continued to point to a much deeper contraction.

“The final new year challenge facing the ECB will be to ensure that governments maintain progress toward the national and region-wide fiscal and economic reforms required to keep the single currency together over the medium- to long-term,” Loynes said.