Further rate cut unlikely but never say never

THE ECB has implemented its seventh rate reduction in official interest rates in seven months in the euro area.

The post-meeting press conference made it clear that the decision was taken in the context of the severe downturn in economic activity which has hit the euro area and global economies.

Interestingly, ECB president Jean-Claude Trichet gave a strong hint that the forthcoming Q1 GDP report for the zone (due out on Friday) will be significantly weaker than previously expected, possibly even weaker than the roughly 2% plunge we have been pencilling in.