BERLIN (AFX) - European Central Bank should follow the example of the U.S. Federal Reserve and cut its key rates to boost flagging growth, DIW chief Klaus Zimmermann told the Berliner Zeitung.
A rate cut on the part of the ECB has been "overdue for some time and is now absolutely necessary", the chief of one of the leading German economic research institutes said.
Zimmermann suggested the ECB should cut its key rate by half a percentage point to counter flagging growth.
Money supply growth, which the ECB regards as a key indicator of medium term inflationary trends, is slowing, "there's no problem with inflation and the economy is sputtering", he said.
He suggested that recession could no longer be ruled out in the US. "There are a lot of signs pointing that way," he said.
If the US economy did slip into recession then DIW would further cut its growth forecast of 2.1 pct for this year.