German IFO Signals Weaker Growth Ahead, Raising Hopes for a ECB Rate Cut

IFO economist Nerb said the time has come for rate cuts. IFO president Sinn said German confidence is falling in "large steps" and IFO economist Nerb said "it is no secret that the third quarter is relatively weak", adding that "we don't see a silver lining in the fourth quarter". Nerb said "the time has come to lower interest rates" and while this doesn't have to come next week, the "signal should soon come that rates will fall in the next few months". The comments come after Spain's Solbes earlier in the week indicated that the ECB may consider interest rate cuts as growth slows down and inflation has peaked. Pressure on the ECB to consider cuts is certainly picking up, while central bank officials still stress upside risks to inflation.

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