No rate cut by ECB expected

European financial markets are not expecting any move on interest rates on Thursday, analysts say.

As the European Central Bank meets for its monthly governors meeting in Finland on Thursday morning, the word on the street is 'status quo'.

"We don't expect the ECB to move today given the data", according to Mike Biggs, European economist at Deutsche Bank.

"And we don't think they'll pin themselves down to a particular course in the future", he added. "It will all come down to what the data does."

Nancy Verret, Forex strategist at Fortis Bank, agrees but says a cut could come earlier than the market expects.

"There's a chance there could be a cut of 25 or even 50 basis points in June", she told EUpolitix.com.

"Inflation is set to fall in the last half of the year and growth is still sticky".

Data has shown that Europe's growth has remained sluggish over 2004 and analysts say the central bank is likely to imply that  it remains committed to improving consumer confidence that is holding back recovery.

And there is a good chance monetary policy will move away from US policy in the coming months.

"The US Fed will have to take its foot off the accelerator and hike rates to deal with growth and demand in the US, but that doesn't mean the EU can do the same. It is still struggling with growth," says Biggs.

"We're going to start to see a divergence between US and EU monetary policy" agrees Kevin Gaynor at UBS Warburg.

"That hasn't been seen since the early 1990s."

The markets expect a hike in US interest rates in the latter part of this year.

ECB president Jean-Claude Trichet will hold a press conference on Thursday afternoon.

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