Unit 2 and 4: ECB Cut interest rates to new low

See below an article from the BBC....questions to discuss include:

1. Will the rate cut actually work?
2. Does any 'One size fits all' policy work in a 17 nation monetary union??

The European Central Bank (ECB) is widely expected to cut interest rates later, as it seeks to boost growth amid ongoing fears for the eurozone economy.

A cut would be the first in 10 months, and reduce its key interest rate to a new record low.

Currently rates are at 0.75%, but there have been calls for a further cut amid continuing concerns over the economy, and receding inflationary fears.

The ECB is due to announce its decision at 13:45 local time (12:45 BST).

Official data released on Tuesday showed record high unemployment in the eurozone, and inflation at a three-year low.

That has increased the gloom over the eurozone economy, in which many members remain either in recession or suffering from low growth.

Austerity fears

Many economists had already speculated that lower interest rates from the ECB were likely, but said the fresh data released this week made the case for a cut even stronger.

The majority of economists polled by the Reuters news agency are forecasting that rates will be reduced to 0.5%.

Markets are likely to react positively to a cut, but it is not clear what impact, if any, the move will have on the real economy.

In recent months there have been growing calls for European countries to move away from austerity measures, which critics say are stifling growth.

Instead there are calls for a greater focus on stimulus measures.

Both French President Francois Hollande and newly-elected Italian Prime Minister Enrico Letta have urged a reconsideration of austerity policies.

But there are concerns that changes to the ECB's interest rates are not feeding through to those economies most in need of a boost, with potential lenders still worried about the economic health of countries such as Greece and Spain.