Tuesday, September 27, 2005
The latest money supply statistics for the Euro-zone show that money supply- and credit growth accelarating even further. M3 rose 8.1% and private sector credit growth increased to 8.4%. Remember that the ECB is supposed to keep M3 growth at 4.5%. Together with a consumer price inflation rate that is 1%: point above the supposed ceiling of 2%, it is clear that the ECB:s monetary policy is far to lose, not just according to misesian standards, but also according to its own standards. Interest rates should therefore be raised, not cut.