ECB poised to cut rates to help recession-hit euro zone

Reuters: The European Central Bank is closer to lowering interest rates than at any time since it last cut them in July 2012 and is likely to shave a quarter-point off at its policy meeting next week. Senior sources involved in the deliberations say momentum is building for action to help a euro zone economy which has slipped back into recession, a move that some policymakers wanted to take earlier this year.

Inflation sliding well below target gives the bank scope to act and a senior ECB official said even Bundesbank chief Jens Weidmann, the most hawkish member of the 23-man Governing Council, had an open mind.

After the bank’s last monetary policy meeting on April 4, ECB President Mario Draghi signalled that a cut could come soon when he said that the bank stood “ready to act” to boost the recession-hit euro zone economy.

The ECB’s Governing Council meets in Bratislava next Thursday - one of two annual policy meetings outside Frankfurt. The 23-man body rarely moves rates when it meets off-base, but the bleak economic picture strengthens the case for action.