Reuters performed a poll today in an effort to determine what economists believe the European Central Bank will do in terms of cutting interest rates on key lending numbers. Most believe that the ECB will not make a cut until at least the middle of 2008.
Just a week ago, the ECB was unlikely to cut rates at all throughout 2008 in an effort to stop increasing inflation in the euro zone, a problem that many see as more vital.
The US Federal Reserve cut its major lending rate on Tuesday after worldwide markets saw huge drops on recession concerns. This emergency move by the Fed prompted speculation on whether or not the European Central Bank will make the same or a similar move.
The poll did show that most economists believe that the ECB will need to cut rates this year, though many did not believe that this was likely to happen until later in the year. Most likely, the ECB will need to examine their current approach to growth, which will likely mean cutting the rate later this year.
Another concern is inflation, which has been growing in the euro zone. The official rate of inflation here is 3.1 per cent. The goal of the European Central Bank is to keep it at or below 2.0 per cent, through interest rates and policy.
