Trichet sounded quite open to the use of “unconventional” methods of monetary policy in his Wall Street Journal interview published today and the most vocal champion of those methods is on the wires now, saying they could be used. Former Fed staffer and now Cypriot central banker Orphanides says both conventional and non-conventional means can be used to keep inflation falling below target in the medium-term. Some form pf QE from the ECB seems probable, most likely via commercial paper markets rather than bonds.
EUR/USD has eased as low as 1.3550 as sentiment toward the greenback improves. Obama has backed off the putative tax measures that were moving through Congress. The bank rescue plan is meeting with reasonable optimism, though most see it as a component of a recovery, not the final word and futures are easing which tends to undermine the reflation trade. Oil has turned lower and US equity futures are about 10 points below their earlier highs, now up 15 as they get ready to close for 15 minutes.
