To Raise Or Not To Raise?

European Central Bank (ECB) president Jean-Claude Trichet’s indication last Friday that eurozone interest rates are about to rise continues to make waves.

Yesterday the EU Observer had a piece indicating the Eurozone finance ministers were not amused, and today we have a retaliatory piece were Trichet explains theat the ECB is the ‘listening’ people bank, which is simply responding to citizen concern about ongoing price rises.

The FT made clear yesterday that the decision to raise just now was not going down well in Berlin, where the incoming government now faces the prospects of introducing a strict fiscal policy at a time of monetary tightening, and when the impact of the recent oil price rise is likely to be pinching the already pinched pocket of the German consumer.

Meantime, as the FT today explains, Trichet is feeling the heat, since he has come out and stated that the ” European Central Bank has no plans to implement a series of interest rates rises” (ie no US-style measured pace).

Plenty of material here for an Afoe post if I find the time later today.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".