This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/news/business-22369765

The article has changed 10 times. There is an RSS feed of changes available.

Version 1 Version 2
ECB interest rates expected to fall to new low ECB cuts eurozone interest rate to new record low of 0.5%
(about 2 hours later)
The European Central Bank (ECB) is widely expected to cut interest rates later, as it seeks to boost growth amid ongoing fears for the eurozone economy. The European Central Bank (ECB) has cut its benchmark interest rate to a new record low amid ongoing worries about the eurozone's economic health.
A cut would be the first in 10 months, and reduce its key interest rate to a new record low from the current 0.75%. The widely-expected cut to 0.50% from 0.75% is the first in 10 months.
Concerns are growing about the health of eurozone economies, reflected on Thursday in data showing that German manufacturing shrank in April. Worries about eurozone economies were underlined on Thursday with data showing manufacturing activity across the 17-nation bloc shrank in April.
The ECB is due to announce its decision at 13:45 local time (12:45 BST). In Germany, the eurozone's biggest economy, manufacturing contracted for the second month running.
The Purchasing Managers' Index (PMI) for Germany's manufacturing sector, which accounts for around a fifth of the economy, fell to 48.1 in April from 49 in March. A reading below 50 indicates contraction. Austerity debate
It was Germany's second straight month below the 50 line, and its lowest reading since December. Official data released on Tuesday showed record high unemployment in the eurozone, and inflation at a three-year low.
Well ahead of the ECB's announcement, many economists were forecasting that lower interest rates were likely, but said the fresh data released this week made the case for a cut even stronger.
ECB president Mario Draghi is due to hold a news conference later when he will expand on the reasons behind the rate decision.
There are concerns that the ECB's low interest rates are not feeding through to those economies most in need of a boost, with potential lenders still worried about the economic health of countries such as Greece and Spain.
In recent months there have been growing calls for European countries to move away from austerity measures, which critics say are stifling growth. Instead there are calls for a greater focus on stimulus measures.
Both French President Francois Hollande and newly-elected Italian Prime Minister Enrico Letta have urged a reconsideration of austerity policies.
On Thursday, European Council President Herman Van Rompuy said governments must take immediate action to promote growth and the creation of jobs because patience with austerity measures is wearing thin in some countries.
"Taking these measures is more urgent than anything," he told a conference in Portugal. "After three years of firefights, patience with austerity is wearing understandably thin."
Shrinking
Thursday's Purchasing Managers' Index (PMI) highlighted the problems facing many eurozone countries. The index for Germany's manufacturing sector, which accounts for around a fifth of the economy, fell to 48.1 in April from 49 in March. A reading below 50 indicates contraction.
And in France, Italy and Spain, the eurozone's next three biggest economies, the PMI data also revealed contractions in manufacturing activity.And in France, Italy and Spain, the eurozone's next three biggest economies, the PMI data also revealed contractions in manufacturing activity.
For the 17-nation eurozone bloc as a whole, the PMI index fell to 46.7 last month, from March's 46.8.For the 17-nation eurozone bloc as a whole, the PMI index fell to 46.7 last month, from March's 46.8.
"There is nothing here to suggest that manufacturing will turn the corner and stabilise any time soon, putting greater onus on policymakers to act quickly to reinvigorate growth," said Chris Williamson, chief economist at Markit, which collates the PMI figures."There is nothing here to suggest that manufacturing will turn the corner and stabilise any time soon, putting greater onus on policymakers to act quickly to reinvigorate growth," said Chris Williamson, chief economist at Markit, which collates the PMI figures.
Official data released on Tuesday showed record high unemployment in the eurozone, and inflation at a three-year low. The euro fell to $1.3115 from around $1.3150 just before the ECB's decision. But it then recovered to hit a session high of $1.32105, taking it near a two-month peak of $1.3243 reached on Wednesday.
Austerity fears
Many economists had already speculated that lower interest rates from the ECB were likely, but said the fresh data released this week made the case for a cut even stronger.
The majority of economists polled by the Reuters news agency are forecasting that rates will be reduced to 0.5%.
Markets are likely to react positively to a cut, but it is not clear what impact, if any, the move will have on the real economy.
In recent months there have been growing calls for European countries to move away from austerity measures, which critics say are stifling growth.
Instead there are calls for a greater focus on stimulus measures.
Both French President Francois Hollande and newly-elected Italian Prime Minister Enrico Letta have urged a reconsideration of austerity policies.
But there are concerns that changes to the ECB's interest rates are not feeding through to those economies most in need of a boost, with potential lenders still worried about the economic health of countries such as Greece and Spain.