ECB chief economist Stark says growth in the eurozone this quarter and in coming quarters will be very weak and that downside risks exist to ECB staff economic forecasts. During disinflation there may even be periods of negative inflation in some regions, he says.
Sounds like the ECB will keep chipping way at interest rates in the coming months, taking them down further from the present 2.5% level. EUR/USD is consolidating loses at 1.3005 after topping out earlier at 1.3060, just shy of the pivotal 1.3080/85 region.
UPDATE: Stark says room for manuever is very limited to the downside, potentially allowing only for small steps ahead. Keep in mind, Stark is a Bundesbank alumni…
