Austrian central banker Nowotny says that the ECB faces an investment trap if not a liquidity trap and that the ability of monetary policy to boost investment and consumption is very limited now. There is therefore a need to boost fiscal policy measures and leave budget consolidation to0 better times.
It is not often you hear a member of the Germanic wing of the ECB recommend fiscal policy measures, a near heretical stance. That should give you an idea how dire the European economic situation has become.
EUR/USD trades near 1.2900 with rallies limited to the 1.2955/60 area. Cable has dipped back below 1.4000 after a squeeze up to 1.4045 as Europe squared up for the day.
