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     LONDON (MNI) - As the European Central Bank prepares to cut macroeconomic
forecasts, some of its top officials are concerned that a slowdown in growth
might be a taste of a "new normal" in which the potential for expansion is
permanently lower, eurosystem sources told MNI.
     "This has been part of the Governing Council's discussions for a very long
time now, but on the other hand most governors are very reluctant to draw
structural monetary policy conclusions on that basis," one official said, when
asked about the possibility that economic growth might have shifted to a
permanently lower gear. But the official added: "Nobody is saying we have to
live with negative rates for a very long time or change the inflation target.
That's not part of the official discussion - some of them say this outside the
circle - but it's not part of the discussion in the Governing Council."
     Another eurosystem official told MNI of similar concerns.
     "My personal view is definitely in that direction - some kind of new normal
which is not, let's say, the Japanese macroeconomic norm, but still lower than
what we've been used to," the official said. "Nobody is going to stick their
head above the parapet and say that, however. There was this hope of
normalisation from a historical perspective, which was also rekindled by the
U.S. rebound, but it's not very convincing that it's sustainable."
     Meanwhile, the ECB is about to lower its growth forecasts in its
macroeconomic projections at its March meeting, sources said. The European
Commission's winter forecast saw eurozone growth at 1.3% in 2019, down from a
projection of 1.9% made in autumn last year. ECB President Mario Draghi recently
told eurozone finance ministers that he "concurred with the new Commission
economic forecasts and indicated that the ECB would be going in the same
direction," another eurosystem source told MNI.
     An ECB spokesman declined to comment on the subject.
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$X$$$,MT$$$$,MX$$$$,M$$EC$]