But it will take weeks or months before economic data comes in about the depth of any U.S. recession, which could slow Europe's economy by cutting its exports to the crucial American consumer market. They're as much in the dark as the rest of us,'' said Nigel Anderson, chief euro economist at RBS Financial Markets in London. Anderson said he expected a rate cut in October, and another one by the end of the year. The inflation outlook has improved recently with the fall in oil prices, giving the bank a freer hand with interest rates. In addition, the ECB has said that a growth slowdown would also put less upward pressure on prices, one of the reasons it gave in justifying that half-point cut.
Interest rates are the bank's chief tool to control inflation.
Keeping them higher reduces the supply of money in the economy and limits inflation. Cutting them encourages growth by making it easier for business to borrow to build new facilities and expand. Your own email list, discussions, photos, calendar, more. Find Web Sites . Alumni Chapters .