Austrian central bank head Nowotny is pretty much laying out the ECB’s future path, saying that 1% should be the lower limit for the refi and that the deposit rate (where the banks can leave excess reserves on deposit at the ECB should not fall to zero. He says the bank is working out the details on a wide range of non-standard steps and on ways of removing them to avoid inflation once the economy returns to function. Growth will be weak and inflation very low in 2010, he says in a Reuters interview.
The ECB can do more for Eastern Europe ,and may accept non-euro denominated bonds as collateral, if asked, he said.
EUR/USD trades at 1.3375, consolidating its big losses.