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UPDATE 1-ECB's Liikanen says rate cut possible in March

Published 02/06/2009, 01:54 AM
Updated 02/06/2009, 01:56 AM

(Adds details, background)

HELSINKI, Feb 6 (Reuters) - European Central Bank (ECB) Governing Council member Erkki Liikanen said on Friday it was possible that the ECB could cut interest rates at its next meeting.

"As the markets have correctly interpreted, at the next meeting a rate cut is possible," Liikanen, who also heads the Bank of Finland, said on Finnish television broadcaster MTV3.

"The message is that in relation to price stability, our risk is in balance...The ECB's main task is to keep inflation around or under two percent, and this is quite well under control, so we have room to use monetary policy for other purposes," he added.

"An interest rate of two percent is not the bottom limit, it could go lower."

The ECB signalled on Thursday that it will probably cut interest rates again in March after a pause this month, bolstering expectations that euro zone rates are headed for a record low of 1.5 percent.

ECB President Jean-Claude Trichet said he did not exclude the the Governing Council lowering rates from the current 2.0 percent at its next policy meeting, when policymakers will have new data and staff forecasts on the troubled euro zone economy.

(Reporting by John Acher and Eva Lamppu, writing by Brett Young, editing by Kazunori Takada)

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