ECB warns Fed cuts may not help

[flashl]

ECB warns crashing dollar may stop Fed cuts

Rumours of an emergency rate cut over coming days by the US Federal Reserve have swept the global markets, setting off a fresh plunge in the dollar.

Gold surged to an all-time high of $914 an ounce in New York on bets that the authorities will flood the global system with further liquidity to stave off a mounting debt crisis.

...

Lorenzo Bini-Smaghi, a member of the European Central Bank's executive council, warned that the tumbling dollar may now start to foreclose the option of US rate cuts and force the Fed to keep monetary policy tighter than it would like.

"I would not be so sure about the movements of the Fed. There is a serious problem with the dollar in America. We will see what margins they have for further rate cuts," he told Italy's La Repubblica newspaper.

It is the first time that a top central banker has openly aired concerns that dollar weakness could constrain US economic policy.

Until now Washington has largely been able to ignore the currency, treating the slide as a headache for the rest of the world.

Telegraph UK

[bdamomma]

1. another failure added to the * legacy.

[Hydra]

2. Not a failure

like everything else, deliberate sabotage.

[flashl]

3. Its been like a rollercoaster ride ...

btw, I don't like rollercoasters.

[enid602]

4. don't tell

You mean there's a relationship between the Prime Rate, and how much our government has to pay to finance its obligations over the long term? don't tell Bush!!!!