The euro zone is set for an unprecedented third interest rate cut in less than two months when European Central Bank governors meet this week in Brussels, with the key question being, by how much?
With the euro zone in a full-blown recession and inflation in a free-fall, analysts say the ECB has plenty of leeway to reduce the cost of borrowing in the bloc.
Analysts said the case for a rate cut of more than the customary 0.50 percentage points has never been stronger, and some said they find it difficult to see any convincing argument against cutting rates by at least 0.75 percentage points.
The ECB has never cut by such a large amount before, though it was discussed last month.
Markets were disappointed when the ECB reduced its benchmark rate by 0.50 percentage points to 3.25% in early November after the Bank of England unveiled a shock cut three times bigger.
Both had joined the US Federal Reserve and three other central banks in a coordinated 0.50 percentage point cut on October 8.
Inflation, which the ECB has pledged to keep under control, plunged in November to a 14-month low as oil prices collapsed, an official EU estimate showed on Friday. Inflation dropped to 2.1% from 3.2% in October, the Eurostat data agency said, paving the way for deeper interest rate cuts.
Last week ECB president Jean-Claude Trichet said in Cairo that the bank was ready to cut interest rates.
On Thursday, a 27-nation EU survey showed that European Union consumer and business confidence slumped in November to the lowest level in 23 years. And euro zone unemployment nudged higher in October to 7.7% - the highest in nearly two years, Eurostat said.
