Trichet indicates a possible rate cut at the next meeting

Following the continuation of the financial market crisis and inflationary pressure, the next European Central Bank (ECB) policy meeting is being held on 6th November and the ECB President, Jean-Claude Trichet, has indicated that rates may be cut further.

Around the world, stock markets have continued to fall with the Dow Jones Stoxx 600 index down 47 percent this year. Many analysts are concerned that this is no longer a mere financial crisis but a long term economic downturn, as Europe is seemingly on the brink of recession.

Manufacturing and service industries, which are the heartbeat of the euro zone economy, are contracting at a record pace this month and the ECB is being called to act as calls to frontload rates cuts are being made.

Inflation is being treated as secondary importance to the stability and growth of the euro zone.

It is expected that the ECB will cut rates to 2.75 percent by June 2009, as the maintenance of price stability is now of paramount importance.

It is not all doom and gloom, however, as the overall risk to price stability has fallen and predictions are that the consumer price index growth rate will remain above target and that inflation will continue to slow through to 2009.

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