The European Central Bank (ECB) announced this afternoon that short-term interest rates, known as the Minimum Bid Rate, have been raised to 1.50%; a high not seen since early 2009. The news bodes well for the euro zone, as tightening monetary policy should help lift the region’s currency values and keep its industries competitive globally.
The timing of the rate adjustment comes alongside forecasts of accelerating inflationary growth and similar monetary policy adjustments in Sweden, China and possibly New Zealand next week. Such rate adjustments speak to a sense of economic growth not felt in years, but the coincidental timing alongside ratings downgrades, slumps in manufacturing, bullish inflationary figures, and housing price growth seem to signal much more.
We now appear to be entering a period of internal reassessment. Growth is visible, sure; but consumers are still leery, ratings agencies are upset with inaction on several fronts by policymakers, debt contagion looms, and the financial and political structures that brought about the initial crash of our system are still in place, only mildly adjusted.
This is not a song of pessimism; merely an acknowledgement that growth for the next few months, if not years, will likely be marred by forecasts and assessments made by analysts reluctant to accept that anything has really changed. The question is, Has it?
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