Euro Interest Rate Cute in March 2009

ECB's Papademos, broadly in line with other council members, is quoted as saying a further rate cut in March "maybe appropriate" in order to maintain inflation over the medium term, at a level consistent with price stability.

Speaking in London, Papademos doesn't rule out inflation falling close to zero for a short period; but once again sees the risk of deflation in the Eurozone as "remote". Otherwise economic risks remain to the downside, with it too soon to say whether a bottom has been reached. Meanwhile the ECB VP says any unconventional policy steps will be taken independent of rate policy. ECB members have been talking up the chances of a further rate cut in recent days, with a 50bps reduction from the 2% level, now more or less assured for the upcoming March 5 policy meeting.

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