Rate cut case boosted as inflation hits four-year low.

(From Irish Independent)

THE case for a cut in interest rates strengthened further yesterday as figures showed eurozone inflation at a four-year low amid stagnant business and consumerconfidence.

The Governing Council of the European Central Bank meets today to discuss interest rates. Few analysts expect a cut from the current rate of 2pc, but more and more thinkthere will be one in the next couple of months.

"The momentum of the recovery is starting to wane and this will increase pressure on the ECB to cut," said Ken Wattret, chief eurozone market economist at BNP Paribas inLondon. "This week is probably a bit early, but a half per cent cut in June, or maybe evenMay, is now more likely."

Estimates from the EU statistics service showed the inflation rate in the 12-nation zonerunning at 1.6pc, its lowest rate since November 1999, and below the 2pc rate aroundwhich the ECB aims to keep inflation.

"It now looks like the ECB will cut by up to half a percentage point by mid-year," said AlanMcQuaid, economist at Bloxham Stockbrokers in Dublin. "There is a very good chancethat Irish output will increase by more than 4pc this year, although lower rates will alsoadd to the credit boom."

The European ...