"I guess they could cut, but they have. It would just be acknowledging what they have already done," he said. "Then, what happens if it doesn't work?"
"Then he's stuck," O'Driscoll added. "Then everybody knows the next thing he has to do is pull a Japan and go to zero."
A rate cut is probably not going to calm the markets, he believes. The problem is that many firms are deemed risky because they borrowed too much money to finance their investments. The only cure for that is to deleverage those investments.
"It's ugly, but it's not susceptible directly to central bank action," O'Driscoll said. "Would it do a great deal of harm? Probably not. Would it do a great deal of good? Probably not unless it turned out to be the magic bullet that restored confidence, and so far, nothing that either central banks or governments have been doing is restoring confidence.
"Maybe because part of it, that they just keep switching plans and coming up with new plans. After you do that several times, and I'm especially thinking of [Treasury Secretary Henry] Paulson, less maybe the Fed, people begin to say, 'Does this person know what they are doing? Or do they have a plan?'"
With reports by ABC News' Alice Gomstyn and The Associated Press.
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