An image of the planned new headquarters of the European Central Bank in Frankfurt. The construction is expected to be completed by 2011.

The European Central Bank is expected to keep its benchmark rate on hold at 1% when the ECB Governing Council will meet in Frankfurt today. In London, the Bank of England's Monetary Policy Committee  is also expected to keep its key lending rate unchanged at a 1694 year low of 0.5%, at its meeting today.

The European Commission said last Tuesday, in its autumn forecast that the Eurozone will return to gradual growth in 2010 and it raised its forecasts as budget deficits and unemployment rise to the highest levels since at least 1995. The commission said Ireland will not achieve full-year growth until 2011 when the Irish debt/GDP (gross national product) ratio will rise to 96%.

The commission said the economy of the 16 member country currency area, will expand 0.7% in 2010 and 1.5% in 2011, after contracting 4% this year. It had previously forecast a 0.1% contraction in 2010. The region’s average deficit will jump to 6.9% of GDP in 2010 and unemployment will reach 10.9% in 2011, the most since at least 1995.

Also this week, purchasing managers' index (PMI) data showed that both the Eurozone manufacturing and services sectors grew in October.

Australia's central bank has raised its benchmark rate for a second time in  a month to 3.5% but hikes in the Eurozone and the UK are not expected until the second half of 2010, at the earliest.

ECB President Jean-Claude Trichet may give some signals today on when the ECB will start scaling back lending to banks and whether it will raise the rate for 12-month money.

Last week, Bundesbank president and council member Axel Weber said commercial banks need to prepare for a “gradual withdrawal” of the ECB’s liquidity lifeline, and signaled its 12-month loans in December may be the last.