European Central Bank (ECB) president Wim Duisenberg has signalled he may reduce interest rates amid waning prospects for an economic recovery in the eurozone. "The perspective of an economic recovery this year is no longer supported by the most up-to-date information," he told a weekend press conference at a G7 meeting of finance ministers and central bankers. Duisenberg added that uncertainties about future developments have "increased recently". His comments have shortened the odds on the bank's governing council deciding to lower rates at its next meeting on 6 March. The euro weakened on the back of the comments, slipping to USD1.0740 this morning from USD1.0775.
The statement adds to the string of mixed signals from the bank over the past few weeks. ECB council member Klaus Liebscher dampened speculation of a rate cut earlier this month, while Irish central bank president John Hurley said the ECB had room to manoeuvre on rates. IIB economist Austin Hughes has described the differences in comments as suggesting a "worrying lack of consensus" around the decision-making table. //www.fxcentre.com