THE ECB IS EXPECTED to announces its second interest rate cut in just over a month today, with speculation that it could drop by 0.5 per cent.
The bank is also expected to extend longer-term loans to banks to ease some of the pressure on struggling institutions.
The ECB’s benchmark rate currently stands at 1.25 per cent, and is likely to be cut by 0.25 per cent. Some analysts are suggesting the bank could go as far as 0.5 per cent.
The Irish government warned it could take action against Irish banks who refused to pass the ECB’s most recent cut (of 0.25 per cent) on to customers.
New ECB chief Mario Draghi has indicated the bank may also step up its bond-buying programme to support heavily indebted eurozone members, but that move is not expected unless EU leaders agree to tighter consolidation on fiscal issues across the 17-member bloc.
EU leaders are to travel to Brussels today for their two-day summit focusing on the eurozone crisis. Angela Merkel and Nicolas Sarkozy are set to outline their proposals for strengthening the single currency an restoring market confidence which could include negotiating a new EU treaty.