European central banks to cut rates to ward off recessionNovember 6th, 2008 - 12:58 pm ICT by IANS
London/Frankfurt, Nov 6 (DPA) Europe’s two leading central banks are expected to announce Thursday big rate cut, as monetary authorities around the world step up efforts to head off a looming recession.Analysts are predicting that the Bank of England (BoE) and the European Central Bank (ECB) will each announce hefty reductions in borrowing costs which are likely to be followed up with more cuts in the coming months.
But while the ECB is forecast to deliver a 50-basis-point cut, as a measure of the scale of the economic slump threatening Britain some analysts believe the BoE could be forced to slash rates by as much as 100-basis-points this week.
Rates currently stand at 3.75 percent in the 15-member eurozone and 4.5 percent in Britain.
Analysts say, however, by around the middle of next year rates in both countries could be as low as two percent with the recent retreat of inflation now triggering talk about the risks posed to the world economy by deflation.