The head of the European Central Bank is leading calls for bold action to ensure the global economy recovers by next year.
In a speech in Tokyo Jean-Claude Trichet said the ECB must balance the need for immediate action to tackle the credit crunch with a sound exit strategy for such policies. The euro fell against the dollar as Trichet’s comments failed to eliminate concerns about a split among ECB policy makers on how far to cut interest rates. In Washington, the International Monetary Fund’s Managing Director Dominique Strauss-Kahn was upbeat: “The good news is that the free fall in the global economy may be starting to abate. Recovery, as we’ve said for months in our forecasts, is possible in the first half of 2010.” He spoke as the IMF’s said in its World Economic Outlook report that the global economy is in the grip of a “severe” recession with “worrisome parallels” to the Great Depression, and a recovery will probably be weak.