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Almunia doubts positive effect of interest rate cuts

European Commissioner for Economic and Monetary Affairs Joaquin Almunia expressed doubts Wednesday that interest rate cuts could be the key to solving the financial crisis currently afflicting the global economy.

“I know that many people are calling for lower interest rates as a solution to these turbulences, but I have serious doubts that this would be a solution," Almunia said at an economic policy conference. Global imbalances such as the US current account deficit and China's massive trade surplus were underpinning the current financial market turmoil, Almunia said, adding that he couldn't rule out a disorderly unwinding of these imbalances. (fxstreet)