ECB may reduce interest rates, says Barroso

Conditions are ripe for interest rate cuts by the European Central Bank (ECB), according to Jose Manuel Barroso.

The president of the European commission made his comments on Sunday on RTL radio.

Declining to comment on the scale of a potential rate cut, he said: "It is true that now the conditions are there for a drop in interest rates."

"I am awaiting decisions from the ECB that go in this direction."

Mr Barroso said it was necessary to monitor economic developments, noting that deflationary fears now exist among some financial analysts, when inflation was the overriding concern a couple of months ago.

Jean-Claude Trichet, the president of the ECB, has said the financial institution may cut rates in the coming week providing there is evidence that inflation pressures have eased off.

The ECB marginal lending facility stands at 3.75 per cent, the main refinancing operations fixed rate is 3.25 per cent and the deposit facility is currently 2.75 per cent.