Trichet's Chart: European Inflation Fighting

07/31/08 03:31PM EDT
Euro zone inflation for the month of July surprised me to the upside this morning, coming in higher than July than June by 10 basis points at +4.1% year over year growth.

The chart that we put together below underscores the mapping of Trichet’s decision making process (raising nominal rates in line with reported inflation). Bernanke has chosen to roll the dice, and let inflation run away from the Fed funds rate, by a significant margin.

Inflation needs to be fought. Central bankers around the world are gaining credibility by the day by doing so. The US government should realize that it is global this time, and do the same.
KM
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