Monday, 31 March 2008
The needle of the compass
The ECB only has one needle in its compass. ' The primary objective of the ECB’s monetary policy is to maintain price stability. The ECB aims at inflation rates of below, but close to, 2% over the medium term. '
Well the flash estimate for CPI just came out at 3.5%, the euro had firmed up some more against the majors. Spanish CPI came out this morning at 4.6% yoy. Fixed income didn't really bat an eye lid. Bund volume is light at 225k lots. It would appear that the needle of the compass is not doing its job. Perhaps the medium term history will prove to judge otherwise.