ECB as scapegoat of the world economy?

Eric Frey takes the side of Jean-Claude-Trichet, director of the European Central Bank, who was criticized by politicians and economists for maintaining the average interest rates of the euro zone, while the US Federal Reserve Bank dropped interest rates this week in reaction to the plunging stock market. "Since last summer, both central banks have done everything they could in the current crisis to soften the effect of the threatening interbank liquidity squeeze. ... When the extent of the downturn became clear, they [the Fed] acted fast. It's still unclear whether the move will trigger a change, because not even central banks can work miracles. And it's certainly not their job to prevent losses on the stock exchange. But Europe is not facing an immediate recession. At worst, slower growth is foreseen. That is why prices are rising faster than they have in ages. The investment plans of companies today depend more on their market appraisal than on the cost of loans. For us, unlike in the USA, there is no reason to lower interest rates."

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