Bundesbank President Axel Weber says he “would not cry wolf” if nominal interest rates “briefly” fell below 2% (ECB reference rates are now at 2.5%). Rates should be raised “quickly and wholeheartedly” if the economic outlook brightens. The interest rate channel may be temporarily less effective at the moment but it is by no means ineffective, he says. Since the latest projections some downside risks to growth have started to materialize, he notes via Dow Jones.
It sounds as though Herr Weber is willing to entertain further rate cuts as long as they are quickly reversed if the economy improves. No discussion of quantitative ease from the Bubameister as yet…
EUR/USD trades at 1.4110.
