In consequence, as pointed out in this column last month, markets have been able to anticipate the ECB’s decisions from month to month without being seriously wrong-footed. What is less clear, however, is whether or not the markets are correctly interpreting the indications that Trichet has been giving as to the likely course of monetary policy over horizons longer than one or two months ahead.
In principle, the ECB’s policy stance for the medium term is clear enough.
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