Thursday's half-percentage-point cut in European interest rates to a postwar low of 2% may well be a taster of things to come.
By Jeremy Scott-Joynt
BBC News Online business reporter
Economists and central bankers seem to agree on the likelihood of more cuts for the eurozone.
The normally cautious president of the European Central Bank, Wim Duisenberg, was unusually forthcoming in his news conference in Frankfurt, shortly after the ECB had announced its widely-trailed decision.
There was, he said, a "quick and general consensus" that in the face of "sluggish" growth and "very subdued" economic activity in the 12-nation eurozone, a sharp cut was necessary.
Growth would remain slow through 2003 with the possibility of a "moderate" recovery in 2004.
And, after what may be his last-but-one ECB meeting, he made no attempt to fudge the issue when it came to more action to come.
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"You can imagine," he said when asked whether either the ECB or the US Federal Reserve - where rates are a mere 1.25% - could cut again, "we have not exhausted our room for manoeuvre."
Many economists would argue that this has been evident for some time.
"One just wonders why the ECB told us four weeks ago that it had to wait to get confirmation of the trends it was following," said Stefan Schneider, economist at Deutsche Bank in Frankfurt.
The trends included a surge in the value of the euro to almost $1.20, above its value at launch four years ago, zero growth in the eurozone in the first three months of this year, and stubbornly high unemployment in big economies like France and Germany.
"For us, it was pretty evident that these trends would stay in place, so we could have seen it earlier.
"But at least we've seen it now."
Others made it clear they expected the ECB to put its caution behind it.
"Duisenberg may have delivered his last rate cut, but the European Central Bank has not," said Nick Parsons, strategist at Commerzbank.
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"Germany is in technical recession. We will need to see further reductions if Europe as a whole is not to follow."
Governments were predictably pleased with the outcome of the ECB's monthly rate-setting meeting.
The finance ministry of Germany, whose torpor is at the heart of worries about the European economy and whose efforts at reforming labour laws are seen as key, said the cut "gives long-term support to the government's reform efforts".
Germany saw a slight fall in unemployment in May, the first such decrease in 15 months, but the increase in the value of the euro has forced the influential IfW economic think-tank to say it expects zero growth in 2003, after a woeful 0.2% expansion last year.
And French Prime Minister Jean-Marie Raffarin, said the decision "goes in the right direction", indicating that he, too, expects more action to come.
"The ECB's decision is truly welcome," he told reporters.