ECB’s Nowotny: Zero rates neither necessary nor desirable for ECB

Austrian central banker Nowotny says ZIRP is exactly the right policy for the US but is neither necessary nor desirable for the eurozone. The EU should interpret budget rules flexibly when in uncertain times, he adds.

Austria has been in the spotlight in recent weeks as fears over the health of its banking sector spread owing to its massive exposures to Eastern Europe. So far, Nowotny has not addressed those concerns.

Also on the wires, NYU’s Dr.Doom, Nourile Roubini says the US credit crisis is not yet half way over and that unemployment could reach 10% next year.

EUR/USD has bounced back from the 1.2660 area and trades now at 1.2635 in very choppy conditions. US equity markets are off their lows but still down more than 1% in early trade.