The European Central Bank will hold off quick-fire action to help Italy or other euro zone states caught up in its backwash on Thursday but new economic forecasts could open the way to looser policy further ahead.
ECB policymakers meet in Frankfurt against the backdrop of political deadlock in Italy, where last week's inconclusive election has pushed sovereign bond yields higher and fuelled concerns that the euro zone crisis could roar back to life.
A Reuters poll showed uncertainty stemming from the election makes it more likely the ECB will have to help struggling countries such as Spain by buying their bonds.
But Benoit Coeure, a member of the six-man ECB Executive Board that forms the nucleus of the broader 23-strong policymaking Governing Council, said last week the bank would not intervene due to short-term fluctuations in bond yields.
"If yields go up because of political events, there is not much the ECB can do, that's not related to monetary policy whatsoever," Coeure said in a discussion at a Reuters summit on the future of the euro zone.
"What matters to us is how monetary policy signals are transmitted to the real economy. I would focus more on say lending to companies, to households," he added.
To activate its new bond-purchase plan, dubbed Outright Monetary Transactions (OMT), the ECB requires a country to fulfil two conditions: it must already have access to bond markets, and it must sign up to a European bailout plan.
Thursday's post-meeting news conference offers ECB President Mario Draghi, an Italian, an opportunity to stress that the central bank stands by these conditions and will not bend them despite the political uncertainty and higher yields in Italy.
"I think anybody looking for the ECB to water down conditionality will be disappointed," said Nomura economist Nick Matthews.
The Reuters poll pointed to no change in interest rates this month, and suggested the ECB would keep its main rate on hold deep into next year at the earliest.
At 0.75 percent, the main rate is already at a record low and ECB policymakers are preoccupied with improving what they call the 'transmission' of monetary policy - the distribution of the official rate evenly across the euro zone.
Lending rates vary across the 17-country bloc despite the single official interest rate, and the ECB is reviewing its collateral framework to ensure that cheap money is accessible to small- and mid-sized firms.
Draghi has said fixing the transmission mechanism is the ECB's top priority - a message that suggests a rate cut would achieve little until the policy plumbing works better.
But a downward revision to ECB staff projections for inflation and growth - due on Thursday - could open the door to other policy options. The last forecasts, in December, pointed to GDP shrinking by 0.3 percent this year before returning to growth of 1.2 percent in 2014.
Inflation was seen below the target of close to below but 2 percent for both years.
Beyond loosening the ECB's collateral rules, other 'non-standard' policy options - measures the bank can take other than changing interest rates - include the provision of liquidity through lending operations.
The ECB lent banks a total of more than 1 trillion euros in twin 3-year, ultra-cheap lending operations in December 2011 and February 2012 but some banks are now repaying the money early, effectively unwinding the liquidity provision measure.
Repayment of these so-called LTROs (long-term refinancing operations) has driven down excess liquidity in the euro zone - the level of cash beyond what banks need to cover their day-to-day operations - though Draghi says it is still far above a level that would push up market interest rates.
"I think if he opens the door (to policy action), it will be more general and not necessarily in terms of a further rate cut," said ING economist Carsten Brzeski, suggesting another LTRO as a possible option if the outlook deteriorates.
"A rate cut at the current juncture doesn't make sense."
(Writing by Paul Carrel, editing by Mike Peacock)