2 Min Read
* ECB holds rates at 0.75 percent, cuts inflation, growth outlook * ECB President Draghi says wide discussion on rates * Political tensions on Italy grows By Wanfeng Zhou NEW YORK, Dec 5 (Reuters) - The euro fell against the dollar and yen on Thursday after comments from the head of the European Central Bank and a downgrade to the region's growth and inflation forecasts boosted expectations of an interest rate cut. Political tension in Italy added to pressure on the euro. Italian Prime Minister Mario Monti on Thursday faced a revolt by Silvio Berlusconi's PDL party, which ratcheted up tension ahead of an election early next year by walking out of a Senate confidence vote. ECB President Mario Draghi, speaking at a press conference after the bank's decision to keep its main interest rate at 0.75 percent, said there was a wide discussion on interest rates, but the consensus was to leave the rates unchanged. "The euro is slumping against both dollar and yen and we attribute this to Draghi's comments that there was a wide range of discussion over what to do with interest rates today," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. LLC. in New York. "That comment suggests that there was a body of support for easing monetary policy and so the market is looking to the next meeting as perhaps a time to seek a cut." Draghi also said policymakers discussed negative deposit rates, but he did not elaborate further. The ECB also lowered its growth and inflation forecast and said that risks to growth remain on the downside. "The combination of the ECB's cooler growth and inflation forecasts opened the door to a rate cut in the months ahead," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. The euro fell as low as $1.3021 on Reuters data and was last down 0.3 percent to $1.3033. It also lost 0.4 percent to 107.33 yen. The dollar slipped 0.2 percent to 82.35 yen.