Yet this is exactly the stance of the European Central Bank, which is treating the euro zone as if its financial sector was somehow decoupled from the rest of the economy – and running a different monetary policy for each sector at the same time. By pumping in whatever liquidity the financial sector needs to alleviate the credit crunch, the ECB is effectively maintaining a deflationary bias for the financial sector, whereas it has announced an inflationary bias for the rest of the economy.