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Article: Defended; The European Central Bank.(The European Central Bank and monetary policy)(Brief Article)
- Article from:
- The Economist (US)
- Article date:
- April 27, 2002
CopyrightCOPYRIGHT 2002 Economist Newspaper Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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What if the Fed had set interest rates for the euro area last year?
EVERYBODY knows that the Federal Reserve saved America's economy from deep recession last year, by slashing interest rates. By contrast, the European Central Bank dithered, cutting rates by too little, too late--further evidence of the bank's incompetence, and of its obsession over fighting inflation even as output fell off a cliff. The evidence? The Fed cut interest rates by a total of 4.75 percentage points last year, to 1.75%. The ECB cut rates by only 1.5 percentage points, to 3.25%.
Do not rush to condemn. A new report* from the Centre for Economic Policy Research defends the ECB, ...