The European Central Bank is expected to keep its key interest rate unchanged Thursday as it awaits to see whether last week's massive liquidity injection will get banks to lend more money to businesses and consumers and support the struggling economy.

As often, attention will center more on what the central bank's president, Jean-Claude Trichet, has to say at the ensuing press conference than on the rate decision itself.

Despite some worries that a corrosive spiral of falling prices may become entrenched in the 16 countries that use the euro currency, most analysts think Trichet will say that the current interest rate is "appropriate" -- indicating that it will not begin raising rates from their record low of 1 percent any time soon.

Prices in the euro are now falling -- in the year to June they fell by 0.1 percent from the previous year. Higher rates are used to combat inflation, but the opposite problem -- sluggish growth, falling prices and weak demand -- remains at the fore.

Recent economic news, such as business sentiment surveys out of Germany, have suggested that the euro zone remains mired in recession but that the scale of the contraction in the second quarter will be less than the 2.5 percent quarterly drop recorded in the first three months of the year.

Many members of the bank's rate-setting governing council have indicated that they would not favor reducing the benchmark rate and had actually begun to talk about the need for exit strategies once economic recovery has been entrenched.

The Frankfurt-headquartered bank, which is holding this month's meeting in Luxembourg, has been criticized by many for not being as aggressive as the U.S. Federal Reserve or the Bank of England both in cutting interest rates or pursuing unconventional measures such as boosting the money supply.

In May, the bank lowered the refinancing rate to its current low and extended the maximum maturity of its bank lending from six months to 12 months. It also pledged to provide unlimited liquidity at the new, longer maturity.

Last Wednesday's euro442 billion ($621 billion), 12-month money auction was widely seen as successful in that it managed to reduce interbank interest rates. Whether the falls get banks lending to each other -- the main point behind the liquidity injection -- will take time to assess.

Loans to the private sector remained low before the auction, rising by only 0.2 percent in May from the previous month.

Commerzbank analyst Michael Schubert said lending to the private sector has been "unusually low" compared with the amount of previous central bank money provided, because the commercial banks have hoarded the cash for "precautionary" reasons.

"Banks wish to protect against unforeseen liquidity needs while non-banks prefer the security afforded by cash," said Schubert.

Last week, Axel Weber, the president of the Bundesbank and a key member of the governing council, said banks should begin lending. If they don't, the central bank could step in directly and start lending to companies itself by buying up corporate bonds, he indicated.

"Even Weber, who had shown no enthusiasm for credit easing so far -- to put it mildly -- suggested that central banks would have to bypass the banks if the banks restrict credit and do not pass on the ECB's generous refinancing conditions to households and enterprises," said Guillaume Menuet, an economist at Merrill Lynch.

For now, the ECB will be looking for evidence that its liquidity injection is bearing dividends and is therefore not expected to announce any further "unconventional" measures aside from its recently announced limited program to buy euro60 billion worth of euro-denominated covered bonds -- a low-risk type of asset-backed securities.

The hope behind such a policy is that it may raise prices of assets on bank balance sheets, keep prices from falling for too long or too far, and well as giving the banking system more funds to lend to homeowners and businesses.

In contrast to the measures announced by the ECB, the Fed and the Bank of England have cut their interest rates to below 0.25 percent and 0.5 percent respectively and unveiled much larger programs to boost the money supply to get banks lending again.

Many analysts think the European Central Bank's relative caution will likely mean that the euro zone recovers later and more slowly than the United States and possibly Britain. The Bank itself does not expect recovery to kick in fully until the middle of next year.