Ignoring the gathering storm in US sub-prime mortgages and tangible signs of a slowing European economy, the then ECB President Jean-Claude Trichet infamously presided over an ECB rate hike in July 2008, subsequently seen as hastening the onset of the global financial crisis. Then inflation in the Eurozone was running at 4% and the ECB’s backward looking models suggested that a 25bps hike to 4.25% was appropriate. This hike was the proverbial straw that broke the camel’s back. Just three months later…
‘Déjà vu Trichet 2008: Central banks tightening monetary policy into an economic downturn’
31 Dec 2018
Posted by Barry Norris