Euro rate cut on the cards

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The Independent Online

The European Central Bank could cut its interest rates next week for the first time in nine months to stimulate the recession-racked eurozone economy, according to City analysts.

"The last few weeks must have increased worries about the fragile eurozone economy," said Christian Schulz at Berenberg Bank. "We now see a 60 per cent probability for a 25 basis points rate cut."

The ECB reduced interest rates shortly after Mario Draghi succeeded Jean-Claude Trichet as president in November 2011. But rates have been stuck at 0.75 per cent since last July, despite a deepening of the continent's recession.

Analysts said economic data showing that Germany, the continent's largest economy, is now struggling to grow could tip the balance on the ECB's council for a cut. A decline in the annual inflation rate across the eurozone to 1.7 per cent in March could also help persuade the ECB to act.

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