ECB sure to cut interest rates this month

IN an economic environment still fraught with uncertainty, we can be sure of one thing: the over-ponderous European Central Bank will cut interest rates this month.

On a fundamental basis, this should have been done long before now, given the pretty negative economic outlook. There is talk of Germany being the next Japan and no one seems to be batting an eyelid or sounding any sort of warning bells in that regard, and if they are, then the ECB has not been listening.

It may be too simple to draw parallels between the policy of the US central bankers and the ECB, but since the US hit hard times, the US Federal Reserve (our Central Bank equivalent) policy has been to slash rates. This it did consistently to bring the key rate to 1.25%; desperate measures, argue some, to prevent the biggest economy in the world from plunging into recession. So far the contrast in policy between the two bodies has been remarkable.