ECB will change its tune but later, not sooner

WE CONTINUE to live in interesting times, which are becoming more interesting and confusing by the day. The global equity market performance continues to be pretty dreadful, news of the US economy is still awful, and the ongoing stream of news relating to the subprime crisis is anything but positive.

The high levels of uncertainty are not surprising since the end of the subprime debacle is yet to be seen.

Last week’s trenchant refusal by the European Central Bank to cut interest rates was greeted by surprise and shock by the media and many commentators. On the surface, the ECB inaction appears to be at serious odds with what is happening in the real world and with what the other key central banks are doing.