ECB opens door to rate cut as Trichet heads to crisis talks

FRANKFURT, October 3, 2008 (AFP) – The European Central Bank has opened the door to a rate cut in the coming months as its president Jean-Claude Trichet prepares for high-level financial talks in Paris on Saturday, analysts said.

ECB policymakers “threw the door wide open for a rate cut in the foreseeable future,” commented Bank of America senior economist Holger Schmieding after Trichet said the bank had mulled cutting rates on Thursday.

The benchmark lending rate remained at 4.25 percent, but analysts quickly pencilled in a cut by December at the latest, and possibly sooner if the global financial crisis does not abate.

Meanwhile, all eyes were on the US House of Representatives, where lawmakers were to vote Friday on a new version of a 700-billion-dollar (500-billion-euro) bailout plan for the country’s banking sector.

Trichet said in Paris that the US legislation sponsored by US Treasury Secretary Henry Paulson had to be passed to calm shattered financial markets.

“Clearly Secretary Paulson’s plan must be able to be passed, it must,” the ECB president told French radio station Europe 1.

Some analysts have suggested that another pillar of a global response to the financial crisis could be a coordi