ECB to cut rates to 3.0%

We argued back in December that expectations that the ECB would raise interest rates this year would prove to be wrong. With economic activity in the region continuing to cool and other central banks like the Fed and the Bank of England cutting interest rates, we suggested that the ECB would gradually soften its stance and bring euro-zone interest rates down in the second half of the year. (See European Economics Focus, How far will the ECB lag behind? 5th December).