ECB expected to slash interest rates
The European Central Bank (ECB) will reduce interest rates this week by 50 basis points from its current level 2.5 per cent, according to newspaper reports.
It is thought the ECB led by Wim Duisenberg will move to cut rates on Thursday to control the single currency’s upward movement, thereby managing resultant deflationary pressure and consolidating the 12-nation eurozone’s fragile economic recovery.
The decision comes as national leaders of the world’s eight richest nations meet in Evian, France at the G8 summit.
All eyes will be on statements pertaining to the green back’s 13% fall against the euro and pledges to inspire eurozone growth.
If the ECB decides to cut rates, it will be the second of the year. The ECB made a 25-basis point cut in March.
Analysts forecast The Bank of England is unlikely to change the underlying level of borrowing (3.75%) when its Monetary Policy Committee meets on Thursday.
