Signs of inflation are evident in the European economies, but officials and commentators seem to affect surprise over the fact that an inflationary outlook persists despite their much favored quarter point hikes in interest rates. In this Times Online article, European Central Bank chief Jean Claude-Trichet offers the opinion that inflation is likely to stay above the ECB's chosen "ceiling" of 2% for this year and the next. The rest of the article goes on to describe the usual guessing-game nonsense of whether or not the prescribed interest rate hikes will come, and if so, when.
Interesting to see no mention of the money supply figures in Europe or any discussion of how that might be fueling the observed inflation. In fact, it was not until the third article I read on the subject that money supply was mentioned. About halfway through the Telegraph's article, "ECB warns there is more rate pain ahead", the ECB's chief economist Otmar Issing addresses the issue as it relates to the property bubble: "A Bundesbank veteran, Mr Issing is alarmed by January's 7.6pc rise in the M3 broad money supply. Unlike the US Federal Reserve, the ECB keeps a close watch on money data and assets prices, endorsing action to prick bubbles before they distort the economy."
That's all folks. By the way, I have a table here of OECD monetary aggregates that opens up as a pdf file. The stats are current right up to the last month of 2005. Euro area showed an 8.1% 12 month rate of change in broad money supply according to the statistics. Check out the money supply growth in Iceland. That might explain some of the rocket fueled increase in their share market over the past year or so. See chart.