No ECB rate hike till December 2012: Barclays (by William L. Watts)

FRANKFURT (MarketWatch) -- Barclays Capital on Friday said it now expects the European Central Bank to leave its key lending rate unchanged at 1.5% until December 2012, when it expects a quarter-point rate hike. Barclays economists had previously forecast a quarter-point hike for December of this year. The revision came as Barclays downwardly revised its economic growth forecasts for the euro zone. Barclays now expects 2011 real gross domestic product growth of 1.8% versus a previous forecast of 1.9%. GDP growth in 2012 is seen at 1.1% versus a previous forecast of 1.6%. In a research note, the economists, including chief European economist Julian Callow, said even the December 2012 rate hike is "tentative" and could be delayed further. "Indeed, the risk in the next 12 months alone is now that the ECB might lower the main policy rate by 50 basis points as a confidence-boosting, coordinated G20 action," they wrote, but said such a move would require a significant reduction in the ECB's perception of inflation risks and a more serious threat of imminent recession.