Archive | April 2011

Dr Competitivelove or: How I Learned to Stop Worrying and Love Inflation

The European Central Bank decided yesterday to increase its key interest rates by 25 basis points to 1.25%, starting a cycle very likely to continue further over 1.5% this year. Whatever happens in Southern Europe and however it is going to impact less competitive economies of EMU, the ECB is fighting a wrong enemy.

In times of rising energy and food prices, the ECB tries to tackle a non-existent problem. The 2.6% inflation has no potential to trigger an inflationary spiral in the context of budgetary austerity and salary moderation.

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