FUEL FOR THE FIRE:

Economy throws a curve at ECB plans (Mark Landler, NOVEMBER 24, 2005, The New York Times)

The European Central Bank has settled the debate over when it plans to tighten credit in Europe, signaling a rate increase next week. The debate over whether it should do so rages on.

On Thursday, an influential survey of German businesses reported a larger-than-expected decline in confidence in November, suggesting that Europe's biggest economy, while growing, remains fragile.

That followed two other troubling economic reports on the Continent - one showing a decline in consumer spending in France last month, the other a drop in business confidence in Belgium. Taken together, these indicators seem to challenge one of the central bank's justifications for its first interest-rate increase in five years: that Europe is finally on a sustainable growth path.

Complicating matters further, inflation appears to be easing. On Thursday, five German states reported a decline in consumer prices in October, largely reflecting the recent fall in oil prices.

The '70s are still going strong in Western Europe.

Posted by Orrin Judd at November 25, 2005 10:07 AM