Trichet’s real reasons for a rate rise

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Series Title
Series Details 7.3.11
Publication Date 07/03/2011
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Wolfgang Munchau writes about the European Central Bank‘s latest announcement, in which the institution announce a certain rate increase. In his opinion, this declaration is a political one.

If you take your inflation target seriously and literally, as the European Central Bank does, the decision to pre-announce an almost-certain rate increase is internally consistent. I had expected the ECB to raise its short-term refinance rate in June, but it is now aiming for April. This two-month gap has nothing to do with unexpected price developments. The decision to jump early is political. I am offering three reasons, and one speculation.

Related Links
Spiegel Online Intenational, 14.3.11: Jean-Claude Trichet's Lonely Fight to Save the Euro http://www.spiegel.de/international/business/0,1518,750931,00.html
ESO: Background information: European Systemic Risk Board: EU authority aims to head off crises http://www.europeansources.info/record/european-systemic-risk-board-eu-authority-aims-to-head-off-crises/

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