/www.bloomberg.com/ By Sonja Dieckhoefer and John Fraher
Frankfurt, Feb. 28 (Bloomberg) -- The European Central Bank may lower interest rates for the dozen nations sharing the euro as soon as its next policy meeting on Thursday, comments from ECB officials this week suggest.
Otmar Issing, the bank's chief economist, Guy Quaden, head of the Belgian central bank, and Tommaso Padoa-Schioppa, a member of the ECB's executive board, said they're concerned about economic growth. Two of them said inflation is tame.
Wim Duisenberg, the ECB's president, triggered speculation about a reduction in March when he told reporters last week that he had abandoned his forecast for a rebound this year. Government and industry reports this week have shown Germany's economy stagnant, consumer confidence at an eight-year low and Spanish economic growth at less than half the pace forecast by economists.
``The ECB has fundamentally altered its outlook for the year and has laid the foundation for a rate cut'' of as much as half a percentage point, said Uwe Angenendt, chief economist at ING BHF- Bank AG in Frankfurt.
The ECB last lowered its benchmark rate on Dec. 6, by half a point, to 2.75 percent. That's the lowest in three years and the fifth reduction since the start of 2001. The U.S. Federal Reserve has cut rates a dozen times in that period to a 41-year low of 1.25 percent.
Futures trading suggests lower borrowing costs in coming months. The rate on a three-month euro deposit maturing in March was 2.47 percent last yesterday. A week ago, it was 2.59 percent. The yield on the April contract was 2.39 percent.
Trichet Still Sees Recovery
Not all of the 18 bankers at the ECB, which says it makes decisions by consensus, may back a rate cut. Bank of France Governor Jean-Claude Trichet, France's candidate to succeed Duisenberg, said economic growth will still accelerate by year's end.
``I trust that in the second half of this year there will materialize a picking up of growth,'' Trichet said on Monday. ``It's absolutely clear that this picking up will be vivid, active and significant.''
Bank of Italy Governor Antonio Fazio, who said he often votes with Duisenberg, said on Saturday the time may not be right for a rate cut. Klaus Liebscher, Austria's representative, said in an interview last week a reduction isn't necessary to revive economic growth.
``There is always a danger they will delay a move -- some ECB officials still appear skeptical,'' said Conrad Mattern, chief economist at Activest Investment in Munich, which manages 44 billion euros ($47 billion).
Business confidence has improved in Germany, Italy and Belgium, suggesting the euro region may escape a recession. The European Union has forecast gross domestic product may contract this quarter.
``One swallow does not make a summer,'' Issing said Tuesday.
Duisenberg Changes Tack
At the time of the last rate meeting on Feb. 6, Duisenberg said a rate reduction probably wouldn't do much good as companies and consumers are postponing decisions amid concern that the U.S. will lead an attack against Iraq.
Duisenberg has taken a different tack since then. On Feb. 17, he said the ECB will trim its growth forecast. Five days later, he added ``the perspective of an economic recovery this year is no longer supported by the most up-to-date information.''
``In the light of the comments by Duisenberg at the weekend, a rate cut appears likely on Thursday,'' said Julian Callow, an economist at Credit Suisse First Boston in London, whose team was rated first among its peers in a Thomson Financial survey of analysts last year. ``It was a signal of intent.''
Unhealthy Economy
``Growth isn't as rapid as we would like, and that goes for both for Italy and the euro area,'' Padoa-Schioppa told reporters at the University of Bergamo, Italy yesterday. ``An economy that grows very little isn't a healthy economy.''
ECB policy makers are ``satisfied'' with inflation, he said, echoing comments earlier in the day by Domingo Solans. Inflation in the 12 countries was 2.1 percent in January, down from 2.3 percent in December. The bank aims to cap inflation at 2 percent.
``People now expect a cut and there could be a lot of disappointment if it doesn't come,'' said Mattern of Activest.