Turning over a new leaf?

By C.R. | LONDON

NORDIC and Germanic opposition to unconventional monetary policy is crumbling, so it seems. On March 25th, in interviews with Market News and the Wall Street Journal, two of the more hawkish members of the European Central Bank's governing council hinted that further monetary easing may be on the cards for the euro area. The euro obligingly sank on foreign-exchange markets.

First, Jens Weidmann, president of the German Bundesbank, told Market News that quantitative easing was no longer "out of the question", having previously ruled it out as a legitimate policy tool for the ECB. Then, Erkki Liikanen, Governor of the Bank of Finland, also seemed to open the door to this type of policy. He told the Wall Street Journal that, even with interest rates at record low levels, "we haven't exhausted our manoeuvering room" on monetary policy, and that "the question of negative deposit rates, in my mind, isn't any longer a controversial issue".