Jean-Claude Trichet

Today’s hawkish statement from the ECB means that a rise in interest rates from 1 per cent to 1.25 per cent is almost certain to be announced next month. Only a major discontinuity in Europe’s financial markets can now prevent it. The key question is whether this rate increase is just an isolated event, which proves to be mistaken and is therefore rapidly reversed – like the infamous quarter point rise announced by the ECB in July 2008, when the world economy was already in recession. Or does the ECB announcement definitively mark the low point for global policy rates? If so, it will prove to be the first step of the central banks’ “exit” process, and the start of a lengthy period of monetary policy normalisation. Read more

Both the Federal Reserve and the ECB are now purchasing government debt in large scale. Yet neither of them seems at all eager to admit that they are doing anything unconventional with their monetary policy. In fact, some of the recent statements by both Ben Bernanke and Jean-Claude Trichet are not as straightforward and transparent as they might have been. Read more

Jean-Claude Trichet, ECB president, has been here before. Early in his life as governor of the Bank of France in 1993, Mr Trichet faced down a tidal wave of market pressure and prevented the franc from being devalued.  Read more