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Forex Commentary 12.9
EUROPEAN CENTRAL BANK
Bini Smaghi says ECB may need to take further steps to counter inflation risks (AFX News)Friday, December 9, 2005 http://www.afxpress.com
European Central Bank board member Lorenzo Bini Smaghi indicated that further ECB interest rate rises may be necessary to prevent inflation risks from developing. Using the analogy of a medical condition, Bini Smaghi said the ECB has not yet delivered the ´full treatment´ that may be required to tackle inflation pressures.
´We haven't come yet to the full treatment of vaccines to prevent influenza (ie inflation). The body might need to get stronger before getting the shot,´ he said in a speech. He said the ECB's Dec 1 decision to raise interest rates for the first time in five years just represented a withdrawal of some of the monetary stimulus that has been in place since June 2003. The move should be seen as ´part of a phase in which the euro area stops taking antibiotics, which it has absorbed for too long´, he said. ´The right sequence... foresees that first the antibiotic cure is stopped and only after a while can the vaccination be given,´ he said.
Karin's Translation:
Those of you in the EU maybe should be looking for further interest rate hikes in the near future.
Bini Smaghi says ECB may need to take further steps to counter inflation risks (AFX News)Friday, December 9, 2005 http://www.afxpress.com
European Central Bank board member Lorenzo Bini Smaghi indicated that further ECB interest rate rises may be necessary to prevent inflation risks from developing. Using the analogy of a medical condition, Bini Smaghi said the ECB has not yet delivered the ´full treatment´ that may be required to tackle inflation pressures.
´We haven't come yet to the full treatment of vaccines to prevent influenza (ie inflation). The body might need to get stronger before getting the shot,´ he said in a speech. He said the ECB's Dec 1 decision to raise interest rates for the first time in five years just represented a withdrawal of some of the monetary stimulus that has been in place since June 2003. The move should be seen as ´part of a phase in which the euro area stops taking antibiotics, which it has absorbed for too long´, he said. ´The right sequence... foresees that first the antibiotic cure is stopped and only after a while can the vaccination be given,´ he said.
Karin's Translation:
Those of you in the EU maybe should be looking for further interest rate hikes in the near future.
posted by Karin @ 11:10 AM
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