ECB Bulletin supports “more than 50bp” rate cut in December

The ECB November monthly bulletin in combination with negative economic news (e.g. larger than expected fall in 3Q German GDP and downward revision of the growth and inflation forecasts by the IMF and the OECD) suggests a rate cut by more than 50bp according to Citibank economists in a report published on November 13.
For now, Citi economists expect either 75bp or 100bp in December and further cuts in 2009.
The ECB is quite negative regarding the outlook for the economy and expects further negative repercussion of the financial crisis on the economy. Regarding inflation, the ECB expects “that annual HICP inflation rates will continue to decline in the coming months, reaching levels in line with price stability in the course of 2009. Stronger downside movements in HICP inflation resulting from base effects cannot be excluded around the middle of next year, but these would be short-lived.” While the ECB sees that “upside risks to price stability over the medium term are alleviating”, they still do not see that these risks have fully disappeared.