Wall Street Journal
April 4, 2011
This Thursday, the European Central Bank might as well be renamed the German Central Bank.
And that should not be good news for the euro.
The rate rise the ECB is scheduled to deliver will not only look premature, in terms of both the euro zone and the global economic recovery, but it will highlight with even greater intensity than usual that one policy certainly doesn’t fit all.
So, instead of the single currency getting support as euro-zone yields rise above those of most other major currencies, the euro may well fall out of favor as investors start to worry about the damage that higher rates will inflict on the region.
Certainly, the ECB’s highly hawkish stance stands out on a global basis.
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