ECB mulls key rate cuts next year

Frankfurt, December 8, 2012

A European Central Bank (ECB) policymaker said the bank had had a "very serious" debate about cutting interest rates this week and that a cut was possible next year if the euro zone economy does not pick up.

The German and Austrian central banks separately suggested such a pick up is unlikely, forecasting scant growth in their economies in 2013. The ECB kept interest rates on hold on Thursday, but Governing Council members held "a wide discussion" about cutting interest rates from their current record low of 0.75 per cent.

Jozef Makuch, one of the council members, used the term "very serious" yesterday to describe the debate.

"If the situation does not improve, and there is relatively a small chance there will be a significant improvement, it is possible to expect a move in interest rates next year," said Makuch, who is also the governor of Slovakia's central bank.

The latest growth forecasts paint a gloomy picture.

The Bundesbank expects Germany's economy to grow just 0.4pc next year, down from a June forecast of 1.6 per cent.

The new projection is marked by "a high degree of uncertainty", it added, and "the balance of risks is on the downside". – TradeArabia News Service

Tags: European Central Bank | Frankfurt |