The European Central Bank (ECB) has moved closer to an interest rate cut today despite its decision to leave its benchmark rate unchanged for a 12th month. ECB president Wim Duisenberg said the bank's governing council discussed "extensively" the arguments for and against a cut at its meeting today, while economists said the Dutchman placed less emphasis on inflation pressures in his statement following the decision. Higher than desired inflation has stayed the ECB's hand on monetary policy this year.
"The ECB has leaned considerably towards a rate cut," said Michael Crowley, economist at Bank of Ireland Treasury. "At its last meeting, it said the risks were balanced, a comment that was not mentioned in today's statement." Earlier today, policymakers at the ECB and the Bank of England both left their rates unchanged, at 3.25pc and 4.0pc, respectively. Speaking following the ECB decision, Duisenberg said that the governing council had discussed a rate cut in view of the "high uncertainty on future growth and its implications for medium term inflationary developments". He added that the council would continue to "monitor closely" the downside risks to economic growth. ///www.fxcentre.com