Will the ECB Cut the Euro Zone Rate to Below 1%

Euro plunges in forex trading on the possibility

The ECB is showing signs that it might cut the euro zone interest rate to below 1%. In remarks today, ECB President Jean Claude Trichet seemed to indicate that more monetary easing is possible for the euro zone. His comments sent the euro reeling in forex trading.

Indeed, after the smaller-than-expected rate cut earlier this month, it was assumed that 1% would most likely be the floor for ECB interest rates. Now, however, it seems as though ECB leaders are considering taking rates lower.

Lower interest rates are meant to help stimulate the economy, and there have been murmurings that the euro zone monetary leaders haven’t done enough to help the economy. A lower rate, however, would indicate that the euro zone economy hasn’t been doing as well as European leaders would like the rest of the world to believe.