Thursday, March 3, 2011

False promises

Trichet Says ECB May Raise Rates, Show `Strong Vigilance'

European Central Bank President Jean-Claude Trichet said the ECB may raise interest rates next month to fight accelerating inflation pressures.
An “increase of interest rates in the next meeting is possible,” he told reporters in Frankfurt today after the central bank left its key rate at a record low of 1 percent. “Strong vigilance is warranted,” Trichet said, adding that any increase would not necessarily be the start of a “series” of moves.
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Comment: Not different from Ben Bernanke, Trichet is too much of a coward to raise rates in time. What Trichet does at the moment is moral suasion in the hope to avoid a real rate rise later. Nevertheless, the euro has shot up to close to 1.40 to the dollar.

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