ECB donated by Portugal in the war against inflation

Nearly two years record low interest rates in Europe ended. The ECB has declared war on inflation. The outbreak of the normalization of monetary policy - a problem for indebted countries. Goodbye, cheap money! Ends of your time. Anyway, in the eurozone. Here, April 7, 2011 began a cycle of rising interest rates, which may last a year or two. This is - a fundamentally new stage in the monetary policy of the European Central Bank. Having done everything imaginable and even unimaginable during the recent global financial crisis and during the fire extinguishing debt in the European Monetary Union, the ECB has finally started to gradual normalization of financial life. Timely exit from the crisis mode for nearly two years, from May 2009, the refinancing rate was in the eurozone at a record low of 1% per annum. This - an abnormal, unhealthy, crisis level. In circumstances where the majority of the eurozone countries, primarily - Germany, are successfully overcome the effects of severe recession, credit conditions sverhteplichnye businesses and consumers are fraught with the danger of all sorts of bubbles and, above all, inflation. Today, many experts agree that the legendary head of the U.S. Federal Reserve Chairman Alan Greenspan after the attacks of September 11, 2001 is too long held interest rates at extremely low levels. Therefore, it confers on it the now much of the responsibility for the financial excesses of the U.S. mortgage market, which subsequently triggered a worldwide crisis of 2008-2009. However, Greenspan's successor in office the most important world banker, Ben Bernanke, in fact, continues the policy of his predecessor. He even earned the nickname "helicopter pilot Ben", as offered to "throw money from the air, in other words, injected into the ailing U.S. economy virtually unlimited amount of fresh dollars. Ranks of the critics of such anti-crisis measures in recent years increased substantially. Symbolic signal to markets European Central Bank President Jean-Claude Trichet, leaving this fall on a holiday, the dubious glory of a doctor, too long a drug given to patients, does not appeal. So he plucked up courage and started earlier than expected to tighten monetary policy in the euro area, albeit a purely symbolic. Indeed, the current rate increase to 1,25% genuine tightening is difficult to call. However, this is an important signal to markets, stressing the independence of the ECB, and showing that his leadership is returned to its primary, primary task - to ensure the stability of the single European currency. Essential condition for stability - the absence of a creeping devaluation of money, in other words - inflation. In the eurozone the pace in recent months has accelerated significantly and exceeded the ECB's own optimal level of 2% per annum, so that further inaction of the Central Bank would lead to an explicit undermining its own credibility, and thus - the authority of the euro. Of course, one-time rate increase prices does not stop. And even if the end of the year, the ECB gradually raise it to 1.75%, as it predicts a number of analysts, it also has not yet become a reliable barrier against inflation in Europe. Especially because it is caused not only and not so much an abundance of cheap borrowing euros as the worldwide rise in prices of various commodities, as well as food, what impact from ECB headquarters in Frankfurt am Main is very difficult. However, rising rates always have a chilling psychological impact on market participants and bring down inflation expectations in a society which, for example, unions are pushing for excessive demands for higher wages. That, in turn, spins the additional inflationary spiral. Bold move by Jean-Claude Trichet, openly declaring war on inflation, Jean-Claude Trichet arrives very boldly, as influential politicians in so many capitals of the euro zone would be secretly quite pleased with some depreciation of the euro. After all, it automatically would mean a partial depreciation of the huge public debt. Raising the same rates, Trichet, by contrast, creates the governments of debtor countries more difficult, because they will still continue to pay more for the derived capital market borrowing money. For a country like Portugal, a further rise in the cost of credit, even in the minimal size may mean that a drop that overflows the barrel. So far no coincidence that the poorest country eurozone is on April 7 agreed to ask the European Union for financial assistance from the specially created for such cases, the stabilization fund. This cry for help, as well as ECB rate hike, it is no surprise. Therefore, the market reaction has been more than quiet. That frightening at first glance, the fact that after Greece and Ireland have billions of dollars in financial support to provide are now more and Portugal, was neutralized with interest the strongest gesture of Jean-Claude Trichet. For the euro rate is the ECB is far more important than the crisis in Portugal. The euro exchange rate will continue to rise against the U.S. dollar, the single European currency, which on the eve of the meeting the ECB guidelines has grown steadily, is now at the highest level over the past 14 months. And, most likely in the future and continue to gain weight. Firstly, because the money of international investors usually always spill over into currency area with a higher interest rate. And secondly, because the independent European Central Bank has demonstrated quite convincingly: it does not serve the political or fiscal interests of the individual euro-zone countries, and worry about the stability of the joint currency, in line with the needs of this rather strong than weak members of monetary union. The growing rate of the euro, of course, are delighted European exporters because it reduces their price competitiveness in the global market, but strong currency - it is also an additional protection against imported inflation. Whatever the case, welcomed the decision of the ECB in Germany and a variety of business alliances, and the expert community. In general, April 7, was, in spite of Portugal, a good day for the second most important reserve currency. Andrew Gurkov economic commentator Deutsche Welle on materials: BFM.ru