National Irish Bank predicts ECB interest rate cut of further 0.5%

THE ECB will cut interest rates afurther 0.5% in April but will not drop its benchmark rate below 1% this year, according to National Irish Bank, which yesterday published its Quarterly Economic Commentary for Spring 2009.

“The ECB will deliver a final 50bp rate cut in April, but will avoid going below 1.0% in 2009. ECB projects inflation at 1.0% in 2010, which gives them plenty of room for further cuts. The ECB has signalled that other options will be considered once the 1.0% interest rate is reached, and some form of quantitative easing may be applied,” said NIB’s chief economist Ronnie O’Toole.

Mr O’Toole said that on many measures, the level of economic activity is reducing sharply, most notably in unemployment, retail sales and government revenue.