FRANKFURT - THE European Central Bank could cut its main lending rate below 2.0 per cent owing to a sharp drop in inflation, but probably only for a short period, ECB governor Axel Weber said in an interview released on Wednesday.

'I wouldn't cry wolf if, in a situation of very low inflation and positive real rates, nominal rates would briefly fall below 2.0 percent,' Mr Weber told Dow Jones Newswires in an interview conducted late on Monday.

But as soon as the eurozone economy picked up, the bank's governing council should raise its rates again 'quickly and wholeheartedly', stressed Mr Weber, who is also head of the German central bank.

Pressure has grown on the ECB to slash the cost of eurozone borrowing after the US Federal Reserve cut its base lending rate to virtually zero on Tuesday.

ECB governors have lowered their bank's main rate by a total of 1.75 percentage points in three months to its current level of 2.50 per cent, but business activity in the 15-nation eurozone has continued to slump to the lowest level since the bloc was formed 10 years ago.

The central bank is now waiting before going further.

'Given our lack of experience with sub-2.0 percent nominal rates, we've got to be very careful in exploring this territory for a longer period,' Mr Weber said.

On Tuesday, ECB president Jean-Claude Trichet also suggested that the bank would mark a pause in its cycle of lowering rates, though economists sought a cut of at least 0.50 percentage points in January.

UniCredit Markets chief economist Marco Annunziata noted that 'the growth and inflation outlook is dramatically more downbeat than it was during 2002-05, when the ECB kept rates at 2.0 per cent, and plummeting inflation could soon lower inflation expectations and push up real interest rates unless the central bank eases further'. -- AFP