European Central Bank raises rates

Despite still high unemployment , although falling in a number of countries and no sign of inflation rising the European Central Bank has foolishly decided to increase interest rates to 3.25 per cent.Unemployment is still above 8.5 % in France, Germany and Belgium.It is above 7.5 % in Italy,and   Spain.(Eurostat) It is lower than 5 % in Ireland,Netherlands,and Austria.

Undoubtedly the hard line monetarist bank is using a new classical expectations monetarist doctrine to guide its rate setting. The result is bound to be slower growth in Europe at a time when the American economy appears to be slowing. This is not a good development.