The ESB cut rates by 0.25pc just a month ago, and while another cut of the same scale is expected before summer, few economists are forecasting a move today. Negative sentiment towards the eurozone was reinforced this week by reports showing the eurozone manufacturing sector contracted again in March, French consumer confidence slumped to its lowest level in more than six years and German retail sales fell 1.2pc in February from January. However, with the potential fallout from the war in Iraq still unclear, most observers feel the ECB will hold its fire until a better assessment of the situation is possible. Just last week, governing council member and Bundesbank president Ernst Welteke said the ECB was unlikely to make any new changes to interest rates at least until the economic fog brought on by Iraq began to clear.
Observers have previously noted that the bank tends to make its rate cut decisions in Frankfurt, with some saying that its bi-annual meetings elsewhere tend to be more a cosmetic than practical. //www.fxcentre.com