The European Central Bank has kept interest rates unchanged at one percent and ECB President Jean-Claude Trichet says no decision’s been taken on withdrawing its loose monetary policy intended to boost economic growth.
He spoke one day after the Federal Reserve unveiled more stimulus measures for the US economy, which caused the dollar to slump further against the euro but Trichet said he trusts US officials when they say they are not pursuing a weak dollar policy which helps US exports.
At the same time countries like South Korea, Brazil, Turkey and Thailand complained bitterly about the weaker dollar which causes investors to pile into their stronger currencies to get a better rate of return.
Several threatened unspecified “retaliatory measures.”
The Fed’s move is seen as making it less likely that a substantive deal can be reached on cutting global economic imbalances at next week’s Group of 20 meeting in Seoul.