European Economic Affairs Commissioner Pedro Solbes has said monetary policy in the eurozone is "adapted to the current situation". He added that economic weakness in Europe is more the result of a lack of confidence and structural reforms. In an interview with French daily Liberation, Solbes noted that European interest rates are at historic lows, and said injecting fresh liquidity into the economy will not necessarily lead to stronger growth. "We've seen the result of this in Japan; a public deficit of 7-10 pc (of GDP) and negative interest rates for the past 10 years," he said.
Solbes added that he does not think the German economy will fall into deflation, as inflation is currently running at about 1 pc, and wages are growing faster than inflation. "Also, there has not been any phenomena equivalent to the bursting of the real estate market bubble, like in Japan," he said. //www.fxcentre.com