Trichet Is Getting Serious About Tightening While The Eurozone Is Still In Crisis


The ECB intends to go through with early tightening measures aimed at stopping dependency on the bank, according to the Telegraph.

ECB President Trichet said, “the central bank must guard against the danger that the necessary measures in a crisis period evolve into a dependency as conditions normalise.”

But fringe eurozone members would argue they still remain in need of these low interest rates to prop up struggling housing markets and their broader economies.

Ireland, for instance, continues to be in full crisis mode this morning, with the IMF now on site in Dublin negotiating an aid package for the country.

Terms of the deal have yet to be released, but previous rumours suggests a a package worth €80 to €100 billion. As part of the deal, it seems that France and Germany both want Ireland to increase its corporate tax rate.

ECB tightening now, before many of these crisis circumstances are settled, could be extremely dangerous to the banking sectors of these economies.

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