Friday, August 17, 2007

Your Move Now, Jean-Claude

. Friday, August 17, 2007

Now that the Ben cut the discount rate by a half point (after adding liquidity to keep the federal funds rate from rising), the European Central Bank must decide whether it wants to keep on course to raise its rate. "The bank's president, Jean-Claude Trichet, hinted earlier this month that he would lift interest rates again to cool inflation from an expanding economy, a stance he appeared to reaffirm earlier this week by declaring that the period of recent financial market turmoil was largely over."

Monetary interdependence could make this interesting, not least because rising rates in Euroland and falling rates in the U.S. may push the euro up against the dollar, thereby sparking more pressure from Sarkozy...

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Your Move Now, Jean-Claude
 
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