Friday, April 1, 2011

ECB in shocking U-turn

Claude Trichet announced today that the European Central Bank would probably not be raising interest rates at its next meeting.

'With all the deflationary pressures resulting from the effects of the financial crisis on public and private balance sheets, the last thing the European economy needs is an interest rate hike to finally squeeze the last dregs of life out of it. After all, we know that inflation up to about 7% is more or less harmless to economic performance  - why should we bankrupt the periphery and bring down the German banking system just to keep it below 2%?'

Trichet also added 'the European Central Bank is here to serve the people, not a narrow clique of bankers and blinkered technocrats' and suggested 'regulating financial markets so that we don't get another financial crisis 5 years down the line'. He went on to say 'I know the bankers will protest, but I think it's our duty as policymakers to put the public interest first'.

In a similarly surprising move, UK Prime Minister David Cameron announced today that reducing the deficit would no longer be his government's main policy priority. 'Putting people back to work and protecting vital services is much more important than protecting the balance sheets of big banks' he said.

N.B. Any reference to living persons in this post is purely coincidental.