ECB Members Divided over Room for Rate Cut

European Central Bank Governing Council members split over whether scope remains for further interest-rate cuts as evidence mounts that the euro-area economy is on the mend.

Policy makers still can’t rule out lowering the benchmark rate from the record low of 0.5 percent, Bank of Cyprus Governor Panicos Demetriades said in an Aug. 24 interview. By contrast, Bank of Austria Governor Ewald Nowotny said on Aug. 22 that he doesn’t see “many arguments now for a rate cut” after the recent “stream of good news.”

The divisions within the 23-member council are emerging as the ECB prepares forecasts for release next month. The euro-area economy emerged from its longest recession with 0.3 percent growth in the second quarter from the previous three months. Economists predict that a European Commission report due this week will show that confidence in the bloc is the highest since March 2012, according to the median estimate of economists in a Bloomberg survey.


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