“The words are like a poem. They speak for themselves.”

Say what you will about Jean Claude Trichet, the Monsieur Non of global monetary policy, the rock standing resolutely in the path of lower European interest rates in the face of financial and economic turmoil, but you have to love someone who does it with such lyrical panache.

Anyone who can describe, with a hint of self-deprecating Gallic humour, the words of a Group of Seven communiqué as poetic is clearly someone with a fundamentally sound grasp of the absurdity of grand displays of international economic co-operation.

The European Central Bank Governor was referring to the statement issued by the world's top finance ministers and central bank governors at their meeting in Washington last weekend, which produced a brief flurry of excitement in financial markets before the world quickly returned to normal yesterday.

For those of you who missed the G7's contribution to deathless literature, here is the crucial stanza: “Since our last meeting there have been at times sharp fluctuations in major currencies and we are concerned about their possible implications for economic and financial stability.”

Verlaine and Rimbaud must be weeping somewhere in appreciation.

Yet the true significance of the words is that they mark the first change in four years in the standard language used by G7 officials to describe their views about foreign exchange markets.

The phrasing seemed to suggest that economic policymakers were getting ready to reconsider their stoical refusal in the past few years to take action to deal with the consequences of the slumping dollar (and latterly sterling) against the euro and the yen.

In the past, less subtle changes in the language with which policymakers describe currency movements have resulted in sharp changes in foreign exchange markets.

But by yesterday, traders had decided that the markets were still a one-way bet and the US currency continued its decline against the euro, closing in on the 1.60 level, heading towards 50 per cent below where it was eight years ago.

The decline against the yen and sterling has been less dramatic, but the dollar is still about 25 per cent lower against those two than it was in 2002.

In the past, fewer apparently meaningful changes in the language with which policymakers discuss currencies have resulted in sharp movements on the foreign exchanges.

Traders anticipated the possibility that those words would be followed by action - in the form of formal intervention in markets or even interest rate changes.

But this time, markets seem to have discounted any possibility that there will be any change in policy.

They are surely right and the haunting observations by Mr Trichet can only serve as confirmation.

Governments are unlikely to want to throw good euros or yen in the current circumstances after a dollar that continues to be weakened by uncertainty about the state of the US economy.

In the past week, to add to the proliferating evidence of the deepening downturn in housing and employment, we have had more bad news about the consumer and the corporate sectors.

Yesterday, the Government reported that retail sales rose in the first three months of the year at an annualised rate of only 0.7 per cent.

These figures are not adjusted for inflation, which is running at about 3 to 4 per cent, so it is safe to assume that consumption in the first quarter was declining sharply in real terms.

That report followed some horrendous corporate news in the past week.

General Electric kicked off the first-quarter reporting season on Friday with staggeringly bad figures, and yesterday, Wachovia, one of the nation's largest banks, followed suit.

What all this points to is, at best, grave uncertainty about the length and depth of the US recession.

For policymakers in these circumstances to be taking a punt on the future direction of global currencies would seem to be an act of folly that even governments might want to shy away from.

As for co-ordinated interest-rate movements, these, too, seem improbable in the extreme.

On one side is the US Federal Reserve, with all hands on deck, desperately trying to bail out the waters of a slump washing over the sides of the US economy.

On the other, and despite the criticism coming from some politicians, is a European Central Bank (ECB), which is still in the relatively early stages of trying to establish its credibility in the global economy, faced with an economy that is still exhibiting visible vital signs and a surge in global food and energy prices.

In the middle is the Bank of England, pulled one way by a US-style housing and financial slump and pulled the other by an ECB-style threat to its inflation-fighting credentials.

In short, differing economic conditions may require co-operation between the G7 governments, but they certainly do not dictate co-ordination.

The prosaic truth is still more powerful than the poetic pretensions.

gerard.baker@thetimes.co.uk

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