Europe is facing a Catch-22 over interest rates

Article Abstract:

There is a strong expectation that the European Central Bank (ECB) will raise interest rates, even though inflation in Europe's core economies remains very low and growth is still slow. The main problem facing the ECB is the significant difference between core and peripheral European countries. Inflation is quite high in Ireland and Spain, but is still only 0.8% in Germany. UK exporters would benefit if higher interest rates caused the euro to strengthen, but higher interest rates could also restrict economic recovery in Europe at a time when the US economy is overheating.

Author: Hogg, Sarah
Economic aspects, Forecasts and trends, Interest rates

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Goldilocks, the three bears and a reluctant bull

Article Abstract:

The world's main central bankers are facing the substantial challenge of proving the value of the independence they have been granted. In Japan, Masaru Hamayi must increase money supply by unsterilized intervention in the foreign exchange markets. In the US, Alan Greenspan must balance mixed views about how much the Federal Reserve should do to tighten policy. In Europe, central bankers seem to be mistaken in believing that interest rates should rise when there are still significant economic problems.

Author: Hogg, Sarah
Europe, Management, Economic policy, Central banks

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Subjects list: Europe, Column
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