Bloomberg News

ECB to Lower Key Rate to 0.5% by Mid-2012, Citigroup Says

January 06, 2012

Jan. 6 (Bloomberg) -- The ECB will cut its benchmark lending rate to an “unprecedented” 0.5 percent by the end of the second quarter, Citigroup Inc. said, revising a previous call which saw the rate at that level at the end of the third quarter.

Citigroup’s chief euro area economist Juergen Michels predicted two 25 basis-point cuts prompted by “further likely downgrades of the economic outlook in coming months and the likely undershooting of the” ECB’s 2 percent inflation limit, according to an investor note published today.

While the central bank may introduce additional emergency measures, such as a further easing of collateral rules, it is unlikely to embark on quantitative easing, Citigroup said.

To contact the editor responsible for this story: Gabi Thesing at gthesing@bloomberg.net


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