European Central Bank hands out fiscal medicine

The ECB is fighting on two fronts at the moment. On the one hand it has a two-stream eurozone where countries like Ireland, Spain and Portugal are racing ahead, battling to keep inflation below the 2% target level, and for the most part not succeeding. Meanwhile economic indicators from core markets like Germany suggest recovery is still not well established, and could be snuffed out by heavy-handed monetary policy. Give the choice between core and periphery, the ECB would look after the core every time. If the weak Ifo report had not been contradicted, high growth markets would have been ...