Economists expect ECB to keep rates on hold

Most analysts expect the European Central Bank to keep interest rates on hold when it meets on Thursday.

However, many believe the current rate of 3.25% will be reduced over the next few months.

Deutsche Bank economist Ulrich Beckmann forecasts a cut either next week or on March 7.

He says there is a higher probability the reduction will be made next month.

A spokeswoman for Nordea also sees a March cut as more likely, while not ruling out an easing move next week.

"The next move is expected on March 7 or on April 4 at the latest. A rate cut on February 7 cannot be excluded. We estimate a 35% probability for a cut already in February," she said.

Most economists see room for a further easing of ECB monetary policy before the middle of the year. Twenty two out of 34 questioned by AFX News forecasting a rate cut by end-June.

Four see the rate as low as 2.50% at mid-year, with five predicting a 2.75% level, 13 forecasting a 3% rate and 12 an unchanged figure of 3.25%.

Some economists expect the ECB to start tightening policy again in the second half, while others see no rise in rates until 2003.