April 10 (Bloomberg) -- The European Central Bank, struggling to keep inflation under control, will avoid cutting interest rates until September, a survey of economists shows.

ECB policy makers will leave the benchmark interest rate at a six-year high of 4 percent when they meet in Frankfurt today, all 68 economists in the survey said. The bank will start to reduce borrowing costs only at the end of the third quarter, when it's convinced inflation is contained, the median forecast shows.

``Inflation must fall significantly below 3 percent to permit an ECB rate cut,'' said Holger Schmieding, head of European economics at Bank of America Corp. in London. Furthermore, ``economic growth has to slow to an extent that it lowers the risk of excessive wage accords.''

With unions pushing for bigger pay increases after inflation accelerated to a 16-year high of 3.5 percent, the ECB is reluctant to lower borrowing costs. Slowing economic growth may force its hand. The U.S. housing slump has pushed up credit costs globally and prompted the Federal Reserve to slash interest rates to stave off a recession.

The ECB announces today's decision at 1:45 p.m. and President Jean-Claude Trichet holds a press conference 45 minutes later. The Bank of England will probably lower its key rate by a quarter point to 5 percent, another survey of economists shows. That decision is due at noon in London.

Great Depression

The International Monetary Fund said there's a 25 percent chance of a world recession. It estimates losses stemming from the worst financial crisis in the U.S. ``since the Great Depression'' may approach $1 trillion.

``This is a man-made crisis and it's made by this false belief that markets correct their own excesses,'' billionaire investor George Soros said today. ``It will take much longer for the full effect of the decline in the housing market to be felt.''

The IMF yesterday lowered its forecast for economic growth in the 15-nation euro region this year to 1.4 percent from 1.6 percent and said inflation will slow to 1.9 percent next year. The ECB, which aims to keep inflation below 2 percent, ``can afford some easing'' of interest rates, the fund said.

``In the end, economic concerns will wear down the ECB's opposition to a rate cut,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.

`Appreciable' Risk

Germany's Axel Weber, one of the toughest inflation fighters on the ECB council, acknowledged this week that financial-market turbulence poses an ``appreciable'' risk to the global economy. Still, the bank remains focused on delivering price stability, which ``makes an essential contribution to a stable economic environment,'' Weber said.

The ECB in March raised its forecast for 2008 inflation to about 2.9 percent, which would be the highest annual rate since 1993, according to the IMF. While predicting inflation will slow to about 2.1 percent next year, the bank said risks ``remain on the upside,'' including soaring energy and food costs and bigger- than-expected wage settlements.

In Germany, Europe's largest economy, public-service workers on March 21 won a pay increase that the Ver.di union said is worth 8.9 percent over two years. On Feb. 20, the IG Metall union secured a 5.2 percent raise for 85,000 steelworkers.

Faster inflation prompted economists to push back their forecasts for an ECB rate cut. A month ago, the median expectation was that the first reduction would come in June.

While most economists in the latest survey still expect the ECB to lower its main rate to 3.5 percent by the end of the year, nine predict the bank will leave it unchanged.

``Even in 2009, inflation rates won't fall below 2 percent,'' said Holger Sandte, chief European economist at WestLB in Dusseldorf. ``The ECB's hands are tied.''

To contact the reporters on this story: Christian Vits in Frankfurt at cvits@bloomberg.net; Kristian Siedenburg in Budapest at ksiedenburg@bloomberg.net

Last Updated: April 10, 2008 03:50 EDT