ECB to take a pause after 75 bp rate cut

LUXEMBOURG, Dec 4 - The European Central Bank is not setting a new precedent with today's 75 basis point interest rate cut and will likely take a break for now, ECB Governing Council member Yves Mersch was quoted as saying on Thursday. Mersch said in interviews with Luxembourg newspapers that observers should not expect the ECB to keep cutting rates by such large amounts, after reducing its benchmark rate to 2.5 percent.

Asked whether the ECB will cut rates again in January, Mersch told the Luxemburger Wort newspaper: "The fact that we cut rates by 0.75 percentage points does not mean that we have found a new rhythm. We have taken a great step -- now for the time being, a pause. We want to wait until we have new information, and see whether the current measures take effect."

He told the Tageblatt that the ECB was moving back into normal territory where rate moves were typically 25 basis points.

"Without doubt the question of room for manoevre is coming closer. But with 2.5 percent we still have a little bit of margin. However, in the future we will not see such clear rate cuts. We are returning to normal territory, with changes to benchmark rates of 0.25 percentage points," he said.

Mersch said he saw no danger of deflation in the euro zone.