ECB Stimulus Bias Likely to Force Hands of Others

Low inflation, flagging growth, and the European Central Bank’s stimulus bias will probably force eastern members of the European Union to cut interest rates to record lows this week.

Romania took the first step today, lowering its benchmark rate to 2.75 percent from 3 percent. Poland will reduce rates tomorrow, while Czech officials will maintain their own benchmark close to zero a day later as they ponder their stance on stemming gains in the koruna, economists predict. The ECB meets Nov. 6 to deliberate on monetary policy.

Prone to contagion from economic woes in the euro region, their main export market and source of funding, eastern European countries keep a close eye on policy moves in the single currency area. Now they’re facing border-jumping deflation and ECB loosening that are making the leu, the zloty and their peers stronger and endangering slowing growth.

Bloomberg

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