ECB moves to stimulate economy expected

Responding to a deepening economic slowdown and Europe’s sovereign debt crisis, financial analysts expect a more accommodative monetary stance from the European Central Bank as ECB President Mario Draghi and his policymakers hold their monthly meeting coinciding with the start of a crucial EU summit.

Most economists expect the ECB to introduce measures that would help the region’s banks borrow more easily so as to improve the flow of credit to the economy.

It is almost certain that there will be a cut in interest rates to 1.0 percent from the current 1.25 percent; a further acknowledgement that the cost of borrowing was raised too soon earlier this year.

Whatever the ECB does will have to dovetail with moves by France and Germany to streamline Europe’s financial governance.

Paris and Berlin want a common corporate tax base, a financial transaction tax and convergence of financial regulation and labour market policies.

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