European Central Bank meets tomorrow--odds say no interest rate cut as bank tries to keep the pressure on politicians

06/05/2012 6:19 pm EST


Jim Jubak

Founder and Editor,

The European Central Bank will hold its monthly interest rate-setting meeting tomorrow, June 6. The central bank is expected to leave its benchmark interest rate at 1%.

But the odds of a cut crept upwards today with data showing that private sector output fell by the fastest rate in almost three years. Retails sales fell 1% and even factory orders in Germany fell.

Eurostat will release its second take on EuroZone GDP growth for the first quarter of 2012 tomorrow—but the European Central Bank has already seen those numbers. And economists are currently predicting that the EuroZone economy will shrink by 0.5% in the current quarter.

Could the numbers today and tomorrow be bad enough to lead the central bank to cut interest rates to say 0.75%? Possible but unlikely since if the bank did act it would lose some of its leverage over European political leaders and bank head Mario Draghi has been very vocal lately that the bank has done what it can and it’s now up to those political leaders to fix the problem.

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