It received a lot of criticism for that but at least it was building a reputation for steadfastness. It has caught a lot of flak in the past for not explaining its policy and not having a consistent line on interest rates and the value of the euro. However unpopular, its decision not to cut rates was at least steady and understandable. Now the ECB has cut rates but the claim by Wim Duisenberg that new money supply figures mean that inflation is on the way down and therefore the cut was justified have failed to convince. Not least because new figures on Friday show that inflation is on the way up.
German inflation is at a seven year high.
Now the ECB is paid to look a lot further ahead than 24 hours but it all begins to look a bit shambolic. The ECB made a lot of noise in the last few weeks about standing its ground and it has now moved. Once again the ECB has upset the markets by sending confusing signals, failed to impress with its arguments and explanation and undone a lot of good work. Whatever the economics, that could mean this cut in interest rates has done more harm than good. US pushes through trade deals Travelocity cuts costs Links to more Business stories are at the foot of the page.