Austria's Gusenbauer Says ECB Cut Would Be 'Sign of Panicking'

Jan. 27 (Bloomberg) -- Austrian Chancellor Alfred Gusenbauer said a cut in interest rates by the European Central Bank would send the wrong signal to investors and consumers as economic growth remains "solid.''

"What is right in the U.S. can be wrong in Europe because the situation is so different,'' Gusenbauer, 47, said in a Bloomberg Television interview late yesterday during the annual meeting of the World Economic Forum in Davos, Switzerland. A rate cut "would have been a negative sign of panicking.''

The Frankfurt-based ECB hasn't followed the U.S. Federal Reserve, Bank of England and Bank of Canada in cutting rates, choosing to leave its benchmark rate at 4 percent as higher energy and food prices drove inflation above its 2 percent limit.

The ECB, whose main mandate is to keep a lid on inflation, is under pressure to lower rates as economic growth in the U.S. and Europe slows. Stocks plunged this week and a report showed service industries, which account for about a third of economic output, expanded at the slowest pace in more than four years in January.

Bloomberg