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UPDATE 1-ECB still has room to cut rates - Weber

Published 02/24/2009, 12:37 PM
Updated 02/24/2009, 12:40 PM

* ECB still has room to cut interest rates

* Germany will remain in recession for some time

* Everybody needs to revise growth assumptions

FRANKFURT, Feb 24 (Reuters) - The European Central Bank still has room to cut interest rates, ECB Governing Council member and head of the German Bundesbank, Axel Weber, was quoted as saying on Tuesday.

"Yes, there is still some room for manoeuvre, (to cut rates) that we can use," Weber was quoted as saying in a pre-released version of an interview with German newspaper Die Welt.

He added that Germany, Europe's biggest economy, would remain in the grip of recession for some time, and that other countries needed to come to terms with the reality that their economies were doing worse than originally expected.

"Everyone must correct their long-term growth assumptions," Weber said.

Turning to Germany he added: "Germany has exhausted its room for manoeuvre with the second stimulus package... We will still have to live with this recession for a while."

The ECB has cut rates at a record pace in the last few months. Borrowing costs now stand at 2.0 percent, down from 4.25 percent at the start of October.

Most economists polled by Reuters expect the ECB to cut rates again next week.

In an interview with Reuters published on Tuesday, Weber's Greek ECB counterpart George Provopoulos said the ECB was unlikely to cut rates by more than half a percentage point at the March 5 meeting.

That would be in line with analyst expectations and take rates to an all-time low of 1.5 percent.

(Reporting by Marc Jones; Editing by Jason Neely)

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