Coming into Davos, with the world seemingly on edge, the biggest cry was for coordination from the “authorities,” but to judge from the noises coming from the Europeans yesterday, that isn’t likely if what you are hoping for is rate cuts soon.
ECB chief Jean-Claude Trichet was in no mood to budge on the fight against inflation. The absolute best illustration of the huge split over what central banks should do was Trichet’s reception in the hall after his panel.
OECD chief Angel Gurria and former Italian finance minister Domenico Siniscalco greeted Trichet with hugs of encouragement for not bowing to calls for interest rate cuts.
But then up marched an angry business representative from his native France who asked the central bank chief if he wanted to see European industry leave the continent. “I take note,” Trichet said, making no commitment.
Who knows though, if the thinking of some who believe the Fed was hoodwinked into cutting due to misinformation, the ECB’s course may be fully vindicated.