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Thursday, 27 September, 2001, 11:51 GMT 12:51 UK
Eurozone rates kept on hold
Economic and monetary affairs commissioner Pedro Solbes (left) and ECB president Wim Duisenberg
Europe's monetary policy chiefs are expected to cut rates again soon
The European Central Bank (ECB) has kept eurozone interest rates on hold.

Economists said the decision was widely expected although many said the Bank was likely to ease rates again some time in the next month, in the hope of stimulating economic activity.

Ten days ago, the Bank cut rates by a half point, following a similar move by the US Federal Reserve in the wake of the 11 September terrorist attacks.

Many economists believe the Fed will announce another rate cut - its ninth this year - at its meeting scheduled for 2 October.

Although viewed by some economists as a blunt instrument, the aim of any cut would be to encourage consumer and business spending, limiting the length and depth of economic downturn.

Eurozone rates stand at 3.75% while US rates are at 3%.

Italian central bank president Antonio Fazio, also a member of the ECB council, said it was too early for the ECB to make confident predictions about the economic impact of the attacks on the US.

"We need a few weeks to understand what is really going to happen to the world economy," he said.

Another UK move?

The Bank of England, which last week trimmed UK rates by a quarter point, is also expected to loosen monetary policy again soon.

In a Reuters poll, 16 out of 25 economists consulted this week said the Bank would take another quarter point off its benchmark rate, currently standing at 4.75%.

Eight expected no change while one said a cut of a quarter or half point was likely.

"I think they will cut again in response to their estimates of how this US shock is going to have an impact both directly and indirectly on the UK," said John Butler at HSBC in London.

"The question is whether they wait until... November or do it straight away."

See also:

25 Sep 01 | Business
G7 forecasts delay to US revival
25 Sep 01 | Business
Business gurus warn of US recession
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