Bundesbank President Hans Tietmeyer suggested that the German central bank might decide to cut interest rates at today's policy meeting, a move that could boost the sagging dollar against the German mark.
Tietmeyer told the Guardian newspaper in an interview released ahead of publication that the surging mark has done some of the job of tightening monetary policy without the bank having to act.
The bank's 17 policy-makers will "check whether the new situation, as far as the impact of the exchange market development is concerned, may give us a little room for reducing rates or whether we have to stay on course," Tietmeyer said.
A reduction would resume a series of rate cuts that started in September, 1992, and were broken off last July when the bank adopted its "steady hand" policy.
Tietmeyer said it is not yet clear when the Bundesbank will start raising interest rates. Citing the moderation of German money supply growth, he rebuffed market speculation that rate increases are imminent.