European Central Bank Expected to Lower Rates

The European Central Bank is expected to lower interest rates for the first time in more than a year this week to boost faltering economic growth, analysts said.

The ECB’s 18 policymakers will reduce the benchmark rate by as much as half a percentage point to a three-year low of 2.75% when they meet Thursday, according to the forecast of 30 economists surveyed by Bloomberg News.

Consumer confidence in the region fell to the lowest level in more than five years this month, a European Commission survey showed Friday.

Economic growth this year will be the slowest in nine years, the commission forecast.

“The economic recovery in Europe has stalled,” said Bernd Kubista, chief economist of the BVR association of German cooperative banks, which represents more than 1,500 lenders. “Germany in particular will have a very bad start to 2003.”

German business confidence fell to a 10-month low in November. Deutsche Telekom, Europe’s No. 1 phone company, this month posted the continent’s biggest quarterly loss.

At least 10 ECB officials have signaled that a rate cut is imminent, saying they expect price increases to wane. The ECB aims to keep inflation, which slowed to 2.2% in November, below 2%.

Also Thursday, the Bank of England is expected to leave its key lending rate at 4%, the lowest in almost four decades, all 30 economists surveyed by Bloomberg News said.