Bundesbank President Axel Weberhas some headlines crossing the wires: He says the ECB has to be cautious cutting rates into territory where it has never seen (2.0%) was the low earlier this decade when the Fed went to 1%) and should avoid cutting rates to the point where real rates would be negative (real rates are now near zero).There will not be a lot of new data when the ECB next meets in january, he says. Once conditions imporove, we should be quick to to nirmalize interest rates, he says. He does not expect deflation.
EUR/USD has firmed toward 1.3350 on the news with the market taking comfort in the ECB’s somewhat more measured approach to monetary easing, at least at the moment.
