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Interesting question on interest rates

April 8, 2011

Good question:

“Is ECB acting appropriately to ensure that inflation is low and steady, or is it acting prematurely and putting the fledging recovery at risk?”

This to me is the big question not only for Europe, but for the world. Yes, you could argue that all the government borrowing and spending was necessary to prevent a financial apocalypse … and yes, you could also argue that such moves have been successful.

But regardless of the necessity or success of any move, there are always consequences and in this case, it is inflation.

Is inflation really a pressing worry at this very moment? No, not really. Not with unemployment where stands. But will it be in the near future? Undoubtedly. The huge trick is finding the right time and the right tools to nip it at the bud, which is a near impossible task.

WSJ.com – Europe’s Rate Rise Signals End of Cheap-Money Era

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From → Economy

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