BNP Says Euro May Weaken Unless ECB Cuts Rate to 1% This Year

By Bo Nielsen and Gavin Finch

Jan. 15 (Bloomberg) -- The euro may weaken unless the European Central Bank cuts its main interest rate to 1 percent this year, according to BNP Paribas SA.

“If the ECB is reluctant to continue this pace of easing, it would be negative for the euro,” said Ian Stannard, a currency strategist in London at BNP. “The ECB has got to go to 1 percent this year. There are still some big risks for the euro.”

The ECB cut the rate by 50 basis points to 2 percent today, as predicted by economists.

The euro fell 0.8 percent to $1.3085 as of 1:11 p.m. in London.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net