IMF says Fed’s scope for monetary policy “exhausted”

Lots of comments from the IMF hitting the wires presently, saying that the US is at the epicenter of the global crisis and that financial markets are still under heavy stress. They continue saying that the Fed’s scope for monetary policy is “exhausted” and must use balance sheets to support credit markets. Onto Europe they say that the ECB has scope to cut interest rates further, with inflation fading fast and deflation risks rising.

Eur/Usd is marginally lower at 1.2925 dragged down by the sell off in Cable which has hit a 3 week low at 1.4405. Eur/Usd bids are seen at 1.2900 and again at 1.2880.