A European Central Bank interest rate cut might not be the magic wand politicians are hoping for, but many economists say it probably would not harm.
In fact, with the inflation outlook relatively tame, the biggest short-term danger seems to be that lowering the cost of credit to a new historic low could turn out to be a damp squib.
"I don't think it would do anything much for the economy," Bank of America European economist Holger Schmieding said.
"It doesn't help much, it doesn't hurt much, I personally would say hold. But with politicians asking for it, we have no good reason against it."
Ratings agency Standard & Poor's joined the chorus for a cut on Thursday, saying cheaper credit might actually be overdue for the 12-nation eurozone and that cutting rates could prevent the region from slipping into a Japanese-style decade of stagnation and deflation.
Markets already are betting on a cut after the ECB in early June softened its tone. Politicians from Germany, Italy, Belgium and Austria are among those pressing the ECB to end its two-year interest rate freeze to battle weak consumer and business sentiment and stuttering growth.
"What the ECB is not taking into account sufficiently is that real interest rates have actually gone up since June 2003, as inflation in the currency zone has retreated," said S&P chief European economist Jean-Michel Six.
"If the ECB does not cut rates, the risk is high that the bank might replicate the serious mistakes by the (Bank of Japan) 12 years ago."
A major ECB argument against a cut of its two per cent official rate is that the region is awash in cheap money. Private loans jumped 7.6 per cent in May and money supply jumped 7.3 per cent, its fastest pace in 18 months. This is driving up asset prices, especially in housing markets in France, Spain and Ireland.
ECB policymakers worry that a rate cut could further overheat asset markets, destabilising the economy and creating future inflationary pressures, while doing little for growth. For the same reasons, the Bank for International Settlements this week said the time has come for tighter global credit.
ECB President Jean-Claude Trichet also has argued that a rate cut could hurt the central bank's credibility and lead to a rise in inflation expectations and long-term market rates.
Right now, though, ECB staff forecast that inflation next year will retreat below the ECB's goal of keeping prices under but close to two per cent. Staff forecast consumer price gains of about 1.5 per cent in 2006, assuming oil around $50 a barrel.
"I don't think there would be a major inflationary cost for a little bit of a boost in demand," said Lehman Brothers European economist Michael Hume.
Mr Hume said given that markets were more worried about growth than inflation, the ECB would not lose face by cutting rates.
"Increasingly the market view is that the policy mistake would be to not cut rates, in which case not cutting rates could do more damage to the ECB's credibility than cutting," he said.