Bundesbank President Axel Weber Remains Focused On Growth, Expects Economic Activity to Slow Further as Crisis Deepens

Daily Forex Fundamentals | Written by DailyFX | Nov 17 08 11:46 GMT |

ECB's Weber said he doesn't rule out further rate cuts and added that the central bank will meet weaker growth with appropriate steps. The comments support expectations for another rate cut at the December council meeting. However, Weber also warned that low rates are an incentive for high risks, which ties in with comments from executive board member Stark, who has warned that excessive easing could lay the ground for new excesses in the future. Weber said the crisis has broadened and intensified and that he is not optimistic on fourth quarter growth and sees lower growth potential in the future. In addition, Weber said an unstable financial system threatens price stability and sustainable growth. The Bundesbank president warned against knee-jerk regulation and said that more regulation doesn't necessarily mean better regulation, but also said that the Bundesbank's financial stability role should be law. Weber also said that the belief in the market ability to self-regulate was waned. Meanwhile, ECB's Noyer said interbank markets are showing the first signs of normalization, but added that "there is still some way to go". Noyer also said that the global financial system has been in crisis for more than a year and that the crisis is not over yet. The French central bank head said French banks "aren't sheltered from the crisis", but stressed that they are "solid and robust" and continue to make profits and have "regular sources of revenue". He expressed hope that lower oil and food prices will increase real disposable income, which could contribute to a possible revival of consumption and investment and ultimately "allow a pickup in growth in the course of 2009. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.