Another series of cut...... Hmm....

LONDON (Reuters) - The Bank of England looks set to chop interest rates by at least half a percentage point this week to an all-time low as it continues its battle to keep the economy from falling into a deep and lasting downturn.

BRUSSELS (Reuters) - Euro zone producer prices logged a record monthly fall in November as energy costs sank, showing inflation could be heading uncomfortably lower for the European Central Bank and firming the case for a rate cut next week.

Both news show sign . First, as house price falling , retail shops closing, unemployment rates rising, both Uk and European are morelikely facing a recession and deflation instead of price inflation .

Falling products price should be good for consumers, but not good for the producers and long term economy stability, thats why the central bank of England and European central Bank is looking forward to cut the interest rate, a.k.a the cost of borrowing to historical low point. Which mean the exchange rate for Pound and Euro will drop further.

However, since last year, The bank of England and European Central Bank have drastically cut the interest rate down, shouldn't they wait little longer for the effect to settle in, before eagerly taking another drastic and looked desperate measures again?

Current recession is set off by the burst of the property bubbles and the CDO's bubbles. The unemployment is partly due to shop closure, and partly due to company lay off to cut operating cost. As fewer company dare not to expand their business, and fewer people willing to spend in the economy down turn, cutting the interest rates , i afraid wont create much effect as desired.

Instead , as the current credit crunch and property bubbles was partly set off by the low interest rate kept by Fed between 2000-2004, Shouldn't the Bank of England and European Central Bank beware of it and more cautious when cutting the rates? Or, they are cut the rates so that the currency exchange rate will fall, which offset the hurts done by high exchange rate against the Dollar?