Pressure grows for ECB cut

By JANE PADGHAM
Updated:

 

PRESSURE on the European Central Bank to cut interest rates mounted today as an influential think-tank slashed its forecast for growth in the euro-zone this year.

The Organisation for Economic Co-operation and Development in Paris expects the economy of the 12-nation region to expand by 2.7% in 2001, rather than the 3.1% previously pencilled in.

It said its forecast included the assumption that there would be be a small cut in interest rates. If the outlook deteriorated, more-aggressive monetary policy easing might be necessary, it added.

The ECB's governing council meets to set rates tomorrow and a quarter-point cut to 4.5% is widely expected.

Bundesbank President Ernst Welteke, a member of the governing council, dashed hopes of a bigger half-point cut by saying he is in favour of a 'steady hand' policy.

The single currency was weaker at 89.45 US cents and 62p.

Most watched Money videos