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David Prosser: Draghi's first move is no criticism of Trichet

Thursday 03 November 2011 21:00 EDT
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Outlook It is sometimes tempting to look at the world through the prism of personality. We know Jean-Claude Trichet was a conservative, finely tuned to theEuropean Central Bank's inflation mandate. Was he too conservative when he raised interest rates in the eurozone this summer? The decision by Mario Draghi, who replaced him on Tuesday as President of the European Central Bank, to cut immediately the cost of borrowing might suggest so.

That's just too easy, however. Mr Trichet's record on inflation was certainly admirable (better than the Bank of England's, for example), but although his decision to tighten policy in the summer was criticised at the time, it was taken in very different circumstances to those that prevail today.

Mr Draghi has cut interest rates at a moment when the eurozone crisis threatens to spiral out of control and trash the economy of the bloc. It is the right decision – and probably one Mr Trichet would have taken too.

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