European Central Bank policymakers today hinted strongly there would be a further interest rate cut when the ECB meets on December 4th.
However, Governing Council member Yves Mersch warned against expecting that the bank would lower rates more sharply than the two cuts it has made since October.
"A large rate cut could be counterproductive and signal the opposite (to) what we wish to signal, namely certainty and confidence," Ms Mersch, the governor of Luxembourg's central bank, said in an interview with Dow Jones news agency.
After its second half point cut earlier this month, the ECB was criticised by some analysts who had been hoping for a more decisive move in view of a rapidly deteriorating euro zone economy and falling inflation.
By contrast the Bank of England cut British rates by 1.5 percentage points this month and the Swiss National Bank made a surprise 1 point cut yesterday.
ECB Executive Board Member Jose Manuel Gonzalez-Paramo said: “As the growth outlook reduces further the risks to price stability in the medium term, the answer is yes, there is more room to act.”
“It's not improbable that at the next meeting there will be a movement'' in interest rates Mr Gonzalez-Paramo said.
But he dismissed comparisons with other central banks. "We don't have the same mandate and the reactions are different," he said at a conference in Madrid. "The mandates of these central banks don't coincide with that of the ECB, that is very much centred on maintaining price stability."
Comments from other policymakers the day after the ECB's mid-month gathering suggested a December cut was all but certain.
ECB President Jean-Claude Trichet told reporters in Frankfurt he had "already said ... we could decrease rates", a message rammed home by fellow Governing Council members Axel Weber and Ewald Nowotny.
"Owing to a remarkable decline in inflationary pressure in the medium term and rapidly deteriorating economic prospects, euro area monetary policy, in my view, has enough leeway for further easing if necessary," Bundesbank President Weber said at the same banking conference attended by Mr Trichet.
Agencies