EXPECTATION is rising that the European Central Bank will back up its boldest rhetoric to date and start buying Spanish and Italian bonds to lower the unsustainably high borrowing costs of Madrid and Rome.
Talk of such a move has already produced a fall in Spain's and Italy's borrowing costs and pushed European markets upwards.
To add to the pressure on Mario Draghi, the ECB's president, Timothy Geithner, the US Treasury Secretary, yesterday flew to the North Sea island of Sylt to have talks with Wolfgang Schaeuble, the German Finance Minister, ahead of the central bank's policy meeting on Thursday.
The two men issued a statement saying they were optimistic about reform efforts in the eurozone.
They stressed the "need for international co-operation and co-ordination to restore growth". They also expressed confidence in eurozone efforts to reform and move towards greater integration.
Last week, Mr Draghi said he would do "whatever it takes" to preserve the eurozone, sentiments echoed by the leaders of Germany, France and Italy.
At the weekend, Jean-Claude Juncker, the Eurogroup leader, called for action to cut Spain's debt costs, adding: "I don't want to drive expectations but I must say we have reached a decisive phase."
Last night, the ECB President was due to meet Mr Geithner as well as Jens Weidmann, the Bundesbank president, a strong opponent of the ECB buying up Government bonds.
If the central bank does not announce a new bond-buying operation, it could explore new policy tools such as outright asset purchases or quantitative easing.
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