ECB says EU inflation still too high, must be brought below 2.0%

Discussion in 'Wall St. News' started by makloda, Aug 29, 2008.

  1. It seems these clowns forgot that in 7 years of ECB tenure they managed to miss their 2.0% target every year, why would they magically reach it now??

    ECB's Bini Smaghi Says Inflation Must Be Lowered (Update1)

    By Tommaso Ebhardt and Steve Scherer

    Aug. 29 (Bloomberg) -- European Central Bank Executive Board member Lorenzo Bini Smaghi said inflation among the 15 countries sharing the euro is ``too high'' and must be brought below the bank's limit.

    ``Inflation is still high, too high,'' he said in an interview with Bloomberg Television yesterday in Cortina D'Ampezzo. ``We have a 2 percent target and we must bring it back to 2 percent -- below 2 percent.''

    Bini Smaghi is the fourth policy maker this week to signal that the ECB hasn't moderated its resolve to fight inflation even as economic growth falters. Inflation in the euro area is running at twice the ECB's limit, driven by record oil and commodity prices. The Frankfurt-based bank raised its key rate to a seven-year high of 4.25 percent in July to prevent higher consumer prices from pushing up wages, entrenching inflation even further.

    The euro rose as high as $1.4758 from $1.4720 after Bini Smaghi's comments were published. The yield on the Euribor interest rate futures contract for December 2009 rose as much as 4 basis points.

    Bini Smaghi said the ECB has only one tool for fighting inflation -- interest rates.

    Higher Rates?

    ``But we're not the only players. There are others,'' Bini Smaghi said. ``Everyone must adhere to this objective, which is price stability.''

    Fellow Governing Council members Axel Weber and Lucas Papademos said Aug. 27 the bank may need to raise interest rates further should the inflation outlook deteriorate. Executive Board member Juergen Stark told German newspaper Sueddeutsche Zeitung earlier this week that he already sees ``broad-based second-round effects emerging.''

    Their comments prompted investors to reduce bets that a cooling economy will force the ECB to lower borrowing costs.

    ``It doesn't seem to me that we have rates, monetary policy that's too restrictive,'' Bini Smaghi said yesterday during a roundtable discussion in Cortina D'Ampezzo.

    The euro-area economy, which contracted 0.2 percent in the second quarter, is at risk of a ``genuine recession'' as a stronger currency hurts exports, house prices fall and inflation erodes purchasing power, Standard & Poors said earlier this week.

    Still, ``I don't expect inflation to come down necessarily just with weaker growth,'' ECB council member Weber said in an interview published Aug. 27. ``If the economic outlook brightens somewhat again toward the end of the year and next year, which I still expect, we'll have to see if action is necessary.''
  2. zdreg


    they have done a creditable job which is better than the fed debasing the US currency.
  3. By their own standards the ECB has failed, miserably. Growth is faltering, inflation is still around 4% (so much for a strong currency reducing inflation!) and will probably never be brought under their lunatic political 2.0% target.

    I wouldn't doubt for a second that Prof. Dr. Weber and his minions would walk over millions of unemployed in order to be able to declare victory.
  4. zdreg


    it is a discredited theory that inflation creates jobs.
  5. Fighting inflation windmills destroys jobs. Europe will pay dearly for this short sightedness, just like in the 90s.
  6. Inflation was going to decrease, if only they shut their mouthes.
  7. EXACTLY. They've been fanning the flames of inflation every time they've yapped on about how hawkish they are, pushing up EUR/USD and the dollar index lower, and oil higher as a result.

    It's been said many times:

    Hawkish ECB Rhetoric -> Higher EUR/USD -> Lower Dollar -> Higher Oil and commodities -> Higher headline inflation -> Hawkish ECB Rhetoric -> Higher EUR/USD....etc...

    The only time they can bust inflation with hawkish talk is when they are in line with a hawkish Fed.

    All Central Bankers are fools, and no better than the politicians they are front running for.
  8. When inflation is imported, i.e. oil-dependant, all the rate hikes in the world would not cut inflation.

    Not even if they go into a depression.

    Text books may saywhatever, what rules is the reality.
  9. Soon, ECB will cry like Alister Darling :

    Britain is in the grip of its worst economic crisis for 60 years, Alistair Darling has admitted.

    The Chancellor of the Exchequer warns that the slump is going to be "more profound and long-lasting than people thought".

    In an astonishingly frank interview, Mr Darling admits that voters are "p***** off" with Labour and says the party must recover the "zeal" which won it three successive general elections.

    hahahahahaha....great stuff !!!