The European Central Bank can do no good in some market players' eyes. In its latest monthly report the Bank recognized the magnitude of the distortions to M3 money supply figures. These data, which play a key role in determining ECB monetary policy, were grossly overstated. Policy makers concluded that inflationary forces were much stronger than they actually were, the reason they held off lowering interest rates until their May 10 meeting. In fact, money growth has been below their 4.5 percent target. However, their other key inflationary indicator or pillar of monetary policy, the harmonized index of consumer prices, continues to rise and is now up 2.9 percent when compared with last year - well above the 2.5 percent inflationary target set by the Bank. The ECB meets again on Wednesday and is expected to leave their policy making interest rate at 4.5 percent. But we said last time that they wouldn't lower rates...

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