ECB could cut rates and growth may near zero

By Paul Day and Gilbert Kreijger

BARCELONA/THE HAGUE (Reuters) - Euro zone economic growth could be close to zero next year and it is possible the European Central Bank will cut interest rates again next week, ECB policymakers said on Thursday.

Finland's Erkki Liikanen, an ECB Governing Council member, also said central banks had to tread a fine line between curbing inflation and fending off the danger of deflation in times of great economic uncertainty.

ECB Executive Board member Lorenzo Bini Smaghi and Governing Council member Miguel Angel Fernandez Ordonez both bolstered expectations the ECB will cut rates next week by echoing Monday's comments by ECB President Jean-Claude Trichet that a rate cut at the next meeting is possible, although not certain.

"We are in the quiet period, but I'll say what Trichet said the other day," Ordonez said at a business school event.

Speaking on Italian television, Bini Smaghi said: "Inflation is returning towards two percent and we are adapting monetary policy towards that."

Analysts expect the ECB to cut rates by 50 basis points on November 6, its second such reduction in less than a month, which would take benchmark credit costs to 3.25 percent.

German Bundesbank President Axel Weber said central banks always aimed to be ahead of the curve, in periods of decelerating as well as accelerating economic activity, but declined to comment on the current rate outlook.

The U.S. Federal Reserve cut rates by 50 basis points on Wednesday and the Bank of Japan is expected on Friday to consider cutting rates from an already minimal 0.5 percent.