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ECB Rate Cut


SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: The 1/2 point cut by the European Central Bank sent rates to their lowest level since just after WWII. The move, which was widely expected in financial markets around the globe, is designed to jump start the euro zone's 12 nation economy.

LAKSHMAN ACHUTHAN, MANAGING DIRECTOR, ECONOMIC CYCLE RESEARCH: They cut interest rates because they're concerned about the pace of growth and the risk of essentially a double dip recession in the German economy, which is the backbone of the European economy.

PRATT: The ECB's action, the third cut in six months, puts rates for the world's second largest economic region at two percent. They remain 3/4 of a percent higher than those set by the Federal Reserve. Many experts think the U.S. central bank may trim rates further in the coming months, although such a move would widen the spread in yields between the two economic regions. Most say that would not be the Fed's motivation.

ACHUTHAN: I think U.S. policymakers welcome this because it does stimulate the global economy. But it doesn't mean necessarily that we are therefore going to follow suit and cut, as well.