European Central Bank President Mario Draghi said policy makers discussed cutting interest rates to a record low today, fueling expectations they will act as soon as next month as the worsening debt crisis curbs economic growth.
“We monitor all developments closely and we stand ready to act,” Draghi told reporters in Frankfurt after the ECB left its benchmark rate at 1 percent. Downside risks to the economic outlook have increased and “a few” of the ECB’s Governing Council members called for rate cut at today’s meeting, he said.
The ECB today forecast a 0.1 percent economic contraction in the euro area this year, unchanged from a March estimate, while it lowered its prediction for 2013 growth to 1 percent from 1.1 percent. Inflation forecasts were unchanged at 2.4 percent for 2012 and 1.6 percent for 2013.