The Wall Street Journal-20080117-Politics -amp- Economics- Analysts Bet Europe Central Bank Will Cut Rates
Return to: The_Wall_Street_Journal-20080117
Politics & Economics: Analysts Bet Europe Central Bank Will Cut Rates
A European Central Bank policy maker suggested the central bank's outlook for euro-zone economic growth has darkened, prompting analysts to raise their bets the bank will lower its key interest rate this year as slowing growth overtakes inflation as policy makers' prime concern.
"There will be a moderation of growth inside Europe," ECB Governing Council member Yves Mersch told Bloomberg News. Often seen as a hawkish voice on the Governing Council, Mr. Mersch said the 15-nation bloc should grow "below" its trend rate of about 2% this year.
"Today's comments may be taken as a first signal that the ECB's current hawkish stance may shift over the next months provided that inflation recedes and growth fears keep mounting," Aurelio Maccario, co-head of European economics for UniCredit, told clients in a note.
But ECB President Jean-Claude Trichet declined to endorse the gloomier view, saying he had "nothing to add or to withdraw" from his comments last Thursday, after the Governing Council decided to keep its key interest rate at 4% -- that policy makers would act "pre- emptively" to prevent a rise in oil and food prices from spilling into wages and other prices.
