I guess asset price deflation and a collapse in oil have finally gotten the attention of the ECB. Trichet, in the immediate aftermath of the G7, said a global rate cut is possible as inflation expectations are under control. Close cooperation among central banks is essential, he says.
There is no way he would raise the notion of a rate cut at this time, at this place without intending to follow-through. They better act on Monday.
UPDATE Saturday evening: Reuters headline did not make clear that Trichet was speaking in the past tense about rate cuts, so forget about a rate cut Monday. Pardon the misunderstanding.
Separately, Italian finance minister Tremonti says “Basel II is dead”. Basil II was the basis for mark-to-market accounting and capital adequacy standards.
Finmin Steinbrueck of German holds out hope for a German bank capital infusion at the EU summit on Sunday.
