Month: August 2012

A modest 25 basis point interest rate cut to 0.50 per cent expected from the ECB next month will not be enough to stop the rot By The Economic Times, India  The euro zone will slip into recession and won’t grow until 2013, according to the latest Reuters poll of economists who also don’t expect any new aggressive policy response from the European Central Bank. The latest monthly survey results, released on Thursday, follow news that the euro zone just barely skirted recession in the first half of the year, with only Germany growing in the three months to June and France, the second largest euro zone economy, flatlining. Taken together with a worsening outlook for the euro zone’s most vulnerable economies in a Reuters poll published last week, there appears to expectation for an end to the euro crisis or any prospects for a meaningful economic rebound. A modest 25 basis point interest rate cut to 0.50 per cent expected from the ECB next month will not be enough to stop the rot and would be largely symbolic, as the rate is already so close to zero and can do little to stimulate borrowing. While ECB President Mario Draghi has promised he will do whatever it takes to save the euro, and large-scale purchases of short-term Spanish and Italian debt are likely later this year, there is nothing...