David McHugh, The Associated Press
FRANKFURT, Germany — Economists say the European Central Bank could cut interest rates as soon as Thursday because of fears that the euro area’s economy isn’t recovering — even though top bank officials themselves caution that a cut won’t do much good.
Market expectations have risen in recent days of a reduction in the ECB’s benchmark rate from its current record low of 0.75 per cent when bank’s 23-member governing council gathers to debate the issue in Bratislava, Slovakia.
The economy of the 17 European Union countries that use the euro certainly needs a boost. The ECB says the eurozone will shrink 0.5 per cent for all of this year and unemployment is at 12.1 per cent. Meanwhile, annual inflation is only 1.2 per cent, well below the ECB’s goal of just under 2 per cent. That gives the ECB freedom to cut if it wants to.
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