The Euro-zone joins Britain, with inflation above target. According to the initial estimation for December, the annual rate of inflation jumped to 2.2%, above the target inflation of 2% that the ECB holds. Should interest rates inevitably rise to curb inflation, and push the Euro higher? Not so fast…

Jean-Claude Trichet, the president of the ECB, has recently taken pride in maintaining an almost perfect inflation rate, despite all the turbulences. This new situation, if it’s sustainable, means double trouble for the ECB – On one hand, they want to stop the rise of inflation, and the interest tool is the best means they have.

On the other hand, unemployment is s ... Read more »