ECB may reduce interest rate again

THE European Central Bank may reduce its benchmark interest rate for the third time in seven months this week as the economy stagnates and the euro’s advance slows inflation, economists said.

The ECB may cut its rate by half a percentage point to 2% when policy makers meet in Frankfurt on Thursday, according to the 32 economists surveyed by Bloomberg News. The Bank of England may keep its rate at 3.75%, a separate survey of 38 economists showed.

“The pressure on the ECB is immense,’ said Ralph Wiechers, chief economist at Germany’s VDMA engineering association, which represents 3,000 companies including Siemens AG. “Lowering rates is the only way to slow the euro’s appreciation, at least for a while.’ French President Jacques Chirac and German Finance Minister Hans Eichel are among politicians who have called on the ECB to trim borrowing costs. The euro region’s economy didn’t grow at all in the first quarter. The currency’s 26% increase against the dollar in the past 12 months is eroding demand for exports as well as helping to curb inflation.