ECB set for rate cut as inflation falls sharply
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The European Central Bank is expected to cut its main interest rate for the first time in 10 months on Thursday, driven to act by an economy wallowing in recession and freed to do so by sharply falling inflation.
Economic data over the past weeks since ECB President Mario Draghi said the bank stood ready to act if necessary has shown growth prospects darkening.
Unemployment hit a record high in April. Inflation had its biggest monthly drop in more than four years, to 1.2 percent, well below the bank's target of 2 percent or slightly below.
The numbers point to a rate cut as the most likely outcome of the policy meeting that got under way in Bratislavia at 0700 GMT (3 a.m. ET). But doubts over whether that would do much to boost the region's weaker economies could expose divisions on the bank's Governing Council.
"If the ECB does hold fire on interest rates ...it is very likely only delaying the inevitable," said Howard Archer, European economist at IHS Global Insight.
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