Big mistake in the offing

On Thursday the president of the European Central Bank (ECB) executed the U-turn so much feared by the countries whose economies are now in the recovery phase. Jean-Claude Trichet spelled out a chain of both causes and effects in a statement made after the meeting of the ECB's governing council: the expectations of inflation in the euro zone have increased, as a consequence of the rise in the prices of energy and raw materials; thus it is "essential that the recent upturn in inflation should not increase inflationary pressures in the medium term." And in consequence it is possible, though not certain, that a rise in basic interest rates will emerge from the next monetary policy meeting.

A decision of this type, however moderate it may be (probably, if it happens, it will not exceed 0.25 percentage points), will not be a positive one for those countries which are still undergoing the hardships of a recovery insufficient to create employment, combined with the wary vigilance of the public debt markets: a case which clearly applies to Spain.

However slight the effects of the rise may be (the markets were already almost taking it for granted, as shown by their tepid reaction) it would mean placing an additional brake on Spain's sluggish economic reactivation. It is hardly venturesome to predict that the inevitable consequences of such a rise would be a little less growth and a little less employment. But the ECB seems to have forgotten its due concern for the overall prosperity of all euro-zone countries, now that it seems confirmed that Germany and France are growing at a satisfactory clip.

In periods of recession and grave financial restrictions, it is highly questionable whether the ECB's priority concern ought to be the control of inflation, without any other calculations or attenuating factors. In circumstances of a demonstrably exceptional nature (a grave recession with severe credit restrictions) such as those which Europe is now going through, the ECB should also take into account all these factors, above and beyond the mere evolution of the consumer price index.

The ECB must make its decision with full independence, but with sensitivity to all the questions involved. It must be remembered that the rise in interest rates in July 2008 favored the recession in the euro zone. With all this mind, it seems timely to demand some sort of clarification of these questions, because in a common economic space such as the euro zone it is hardly desirable to foment dissociation or confrontation between fiscal and monetary policies.