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European Central Bank to Meet on Interest Rates

February 03, 2003|From Bloomberg News

The European Central Bank probably will keep interest rates at a three-year low as policymakers wait for evidence on whether the economy will recover soon, analysts said.

All of the 32 economists surveyed by Bloomberg News said the central bank will leave its main refinancing rate at 2.75% when policymakers meet Thursday. Twenty expect the bank to lower borrowing costs by April at the latest.

The central bank for the dozen nations that use the euro has said the half-point reduction in December should boost growth in the region's $7-trillion economy this year. Since the rate cut, European consumer and business confidence has declined.

Inflation, which the central bank aims to keep below 2%, slowed to 2.1% in January from 2.3% the month before, analysts expect a report Tuesday to show. German factory orders probably fell for the first time in three months in December and unemployment rose for a 10th month in January, separate reports this week probably will show.

The European Commission, the European Union's executive branch, said the economy may shrink this quarter, after growing at the slowest pace in almost a decade last year.

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