Sources close to Cornerstone Worldwide have cited comments made by European G7 officials stating that the slide in the value of the dollar and the easing of global inflationary pressure could be achieved by a hike in US interest rates.

The officials are understood to be exasperated by China’s reluctance to raise rates. This is largely attributed to the constraints of domestic politics which have become more sensitive since the decision to reduce fuel subsidies earlier this year.

Cornerstone Worldwide sources believe that such inaction from the two central banks may serve to resign the global economy to a deep recession rivalling that of the Great Depression.

There has been little co-ordinated effort to ease the effects of the credit crunch beyond ECB $230bn liquidity injection earlier in the year. Cornerstone Worldwide are thought to believe that this is because of the clear differences in the mandates of the Federal Reserve and the ECB.  Cornerstone Worldwide’s source also alluded to the US bias toward growth being at odds with the European bias toward inflation containment.

The euro revisited record highs above $1.60 last week in the wake of serious concerns over the GSEs Freddie Mac and Fannie Mae and although it has retreated lower, it remains an obstacle to Eurozone exporters.