Why the Euro Is up and the Dollar in the Toilet

January 23, 2008

European Bank Chief Is Cool to a Rate Cut

  By DAVID JOLLY   PARIS — A day after the Federal Reserve announced an emergency rate cut in the United States in the face of a stock market meltdown, the president of the European Central Bank on Wednesday dashed hopes of any short-term rate relief on the Continent. Speaking to the European Parliament in Brussels, the bank president, Jean-Claude Trichet, said euro-zone monetary authorities remain focused on inflationary pressures in the 15-nation bloc. “In demanding times of significant market correction and turbulence,” he said, “it is the responsibility of the central bank to solidly anchor inflation expectations to avoid additional volatility in already highly volatile markets.” He did not discuss the Fed’s surprise decision to cut its target for the federal funds rate — the interest on overnight loans between banks — by three-quarters of a point to 3.5 percent, the biggest single-day move by the central bank in its histor…