Don't Rule Out a Rate Cut from the European Central Bank

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Financial markets, which are focused on what measures the European Central Bank will unveil this week to end the euro zone debt crisis, may be overlooking the potential for an interest rate cut at this week's central bank meeting. The ECB is widely expected to provide details at a meeting on Thursday about its plans to buy the government bonds of troubled euro zone states such as Spain, which saw its borrowing costs hit unsustainable levels just a couple of months ago.

Indeed, the meeting has become a highly-anticipated event after ECB President Mario Draghi pledged in late July to do whatever it takes to save the euro.

While attention is focused on the central bank’s bond-buying plans, investors should also not rule out a cut in the ECB’s key refinancing rate of 0.75 percent to show that it is determined to restore confidence in the battered single-currency zone, some analysts say.

“The markets aren’t banking on an interest rate cut but we wrote to clients last week and said a quarter of a percent rate cut is very possible this Thursday,” Thomas Murphy, Managing Partner at Family Office Research and Management, an independent investment advisory group based in Sydney, told CNBC Asia’s Squawk Box on Monday. ... Continue to read.

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