The quote below(from Yahoo article) demonstrates the difficulty facing team Europe. Finding a "one size fits all" rate when unemployment for Euro Zone members stands at 20% in Spain and 7.6 % in Germany is a very tough task. The Germans are fretting about inflation and the Irish/Greeks and much of southern Europe are trying to stave off a depression. At some point German citizenary will not approve any more bailouts. Also, the Brits at some point are likely to vocalize their "I told you so" feelings re: the Euro and may fail to chip in to help to clean up this most recent mess(Portugal).
Not sure who is right.The Chinese are braking. The ECB sto be ready to tap the brakes. Meanwhile, the FRB is keeping its foot on the gas.
Higher rates ward off inflation, but can hold back growth if done at the wrong time. As the monetary authority for the euro, the bank must find one rate that suits all 17 member countries. That includes the economies in Ireland and Greece, severely damaged by the debt crisis, as well as in Spain, which is still feeling the collapse of its real estate boom and has an unemployment rate of 20 percent.
That sharply contrasts with Germany, Europe's biggest economy, where the export-driven economy is swiftly recovering, with the unemployment rate dropping to 7.6 percent in March. In the southwestern state of Baden-Wuerttemberg -- an industrial powerhouse home to Porsche, Daimler and dozens of smaller firms -- unemployment is even down to only 4.4 percent.