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Economists Call on ECB to Cut Interest Rates as Growth Slows

The European Central Bank should reverse this year’s rate increases to prevent the euro-area economy from slipping back into recession, members of the so-called shadow ECB council said.

A contraction in European manufacturing and plunging business and consumer confidence suggest the sharp slowdown in economic growth in the second quarter may continue in the third, they said. The ECB shadow council is a group of 15 economists and portfolio managers who watch economic developments and monetary policy in the euro region and issue recommendations each month. The Frankfurt-based ECB has raised its benchmark rate twice in 2011, taking it to 1.5 percent from 1 percent.