Just 3 months ago in July, European Central Bank president hiked the Eurozone bank-to-bank rate to 4.25%, saying that inflation was causing fundamental changes in their economy. Now they’ve announced their second .5% cut in a month, proving that central bankers sometimes don’t even know what’s going on in these volatile times.
They’ve long had a single mandate to control rates, unlike the US Fed which has a dual role of controlling inflation and stimulating growth. Back in July we commented that, in a globally linked economy and in a crisis where central bankers are required to work together, perhaps a single mandate seems short sighted. Just three months later, perhaps they’re realizing that too.