NICOSIA, Dec 1 (Reuters) - The worst of the financial crisis may now be over but its impact is starting to bite into the euro zone economy, European Central Bank Governing Council member Athanasios Orphanides said on Monday.
Next year would be a more difficult year and a worsening of the financial crisis cannot be ruled out, he told the finance committee of the Cyprus parliament.
"Although I hope that the worst is behind us as regards the international financial crisis in the euro zone, in part due to the continuous interventions by the ECB, the impact of this turmoil on the real economy will start from now and in the coming year to become more intense and to be reflected in the growth rate of the world economy," he said.
The ECB has cut interest rates twice since early October to 3.25 percent. Analysts expect it will lower them again by at least 50 basis points at its next meeting on Dec. 4 due to falling inflation and concerns about economic growth.
Retail sales unexpectedly fell last month in Germany, the euro zone's biggest economy. They were down 1.6 percent month-on-month and sharply undershot the consensus forecast of a 0.5 percent rise.
Commenting on the ECB's 50 basis point rate cut on Nov. 6, Orphanides said: "The decision was based mainly on the fact that inflationary pressures in the euro zone had started to ease, with signs of a longer than initially expected economic slowdown."
"2009 is expected to be a more difficult year. I don't have the ability to make a prediction on when there will be an exit from the crisis. I hope that the worst is behind us. We cannot rule out a further worsening of the situation but I would place a smaller probability on this. I hope that there will be a gradual improvement of the situation," he said. (Reporting by Michele Kambas and George Georgiopoulos; editing by David Stamp)