Forecasting the E.C.B.

FLOYD NORRIS

Notions on high and low finance.

The European Central Bank is in an unenviable position. It’s only stated mandate is to fight inflation. These days that is not the important issue, to say the least.

Notions on high and low finance.

But it could do a better job of at least seeming to not be one or two steps behind everyone else.

Last Thursday, Jean-Claude Trichet disclosed that the bank was buying European government bonds again. Markets rallied, then fell when it became clear the bank was not buying Spanish or Italian bonds.

Today the bank is buying those bonds.

All this is reminiscent of what happened in the spring of 2010. Then Mr. Trichet seemed stunned at the suggestion, made by a reporter at a news conference, that the bank would buy Greek bonds. One weekend later, guess what happened.

There are times to fight inflation, and times to try to salvage economies. The E.C.B. is being dragged into a recognition this is one of the latter times.