FRANKFURT, Germany – The European Central Bank is facing conflicting pressures as it decides Thursday whether to cut interest rates for the 18-country euro currency area.
A number of economists think the bank will hold off slashing rates or taking other measures that might stimulate the economy, while a few think it could cut its benchmark rate from the record low of 0.25 percent to 0.1 percent.
Low inflation of only 0.7 percent has raised fears of deflation — a downward price spiral that has afflicted Japan. And retails sale for December — the Christmas period — disappointed.
Other indicators, such as a survey of business managers, suggest the economy is expanding in line with the bank's prediction for a gradual upswing — and won't need more stimulus.