So, I have no clue if 2 % or 3% or 4 % is better or worst..and I doubt anybody could know.

This said, there are good reason to believe that an interest rate at 1% or at 5% would indeed be risky.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

First of all, monetary conditions in Europe are not particularly accomodative right now:

Monetary conditions have been getting tighter over the last four years, not looser. Which coincides with a period of slower growth and rising unemployment.

Second, accelerating inflation is not a problem for Europe right now:

Inflation in the EU15 is now running under 2%, and close to 0% in countries such as Germany.

Third, despite what the FT says, Europe is probably not at "full employment," even by the perverse standards that terms 8% unemployment as "full employment":

In such an environment, it may be that an unemployment rate above the natural rate may lead to low rather than declining inflation, so Europe's current stable inflation rate does not mean that the European unemployment rate is at the natural rate.

Last, those "Taylor Rule" estimates are entirely dependent on choosing the right inflation target. Choosing an excessively low target may make your monetary policy look accomodative even as it is indeed choking off demand:

If it is true that inflation has been fluctuating around 2% in the past two years, justifying the stability of ECB rates with respect to its target, it is also true that precisely the decision of the ECB to set the target rate at 2% may be seen as the "original sin" of monetary policy in the Euro zone. In fact, the period of low inflation that preceded the inception of the single currency has created an historical anchor that in view of the following events proved to be too low, and hence induced a restrictive bias in monetary policy. I argued elsewhere2 that a correct target rate for inflation should be 2.5% or 3%.

Is the problem with the European economy excessive inflation and "overheating"? Of course not, the very question is absurd.

The problem is slow growth and high unemployment. Which usually calls for rate cuts, not increases.

and here 'tis:

Discontinuance of M3

On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release.

Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).

And that is it.  

Apparently the FED doesn't think policy makers are using the number for anything and wants to save the couple of thousand bucks a year it costs to produce and distribute the figure.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre