The European Central Bank can further reduce its headline interest rate, but any cut is likely to be a measured 25 basis point cut, the bank's President Jean-Claude Trichet was quoted as saying on Sunday. Trichet is currently on a trip to Japan and the Kyodo news agency quoted Trichet as saying any additional possible cut would be a very measured one. Kyodo quoted Trichet as saying that a 25 basis points cut was a measured rate cut. It said he also repeated that slashing rates to zero was not at all appropriate in the euro zone. The ECB's benchmark interest rate now stands at 1.25 percent. It has lowered it by 3 percentage points since October and analysts expect it to make one final 25 basis points cut to 1.0 percent in May as the euro zone struggles in its worst recession since the currency was created. The ECB has repeatedly ruled out cutting rates to zero and a number of top ECB policymakers have said they are reluctant to take them below 1 percent. The ECB's main rate remains higher than its peers. The US Federal Reserve's target policy rate is between zero and 0.25 percent. The Bank of Japan's is 0.1 percent and the Bank of England's 0.5 percent.However ECB members point out that the bank's tactic of flooding money markets with extra funding have helped push interbank rates down to levels parallel with elsewhere.
