For years, DM central banks have been forced to kind of suspend disbelief with regard to inflation and other incoming econ data in order to persist in the fantasy that printing trillions in fiat scrip was good for something other than inflating bubbles in financial assets.

I’m sure it wasn’t lost on them (well, it was and still is lost on Kuroda, but he’s quickly becoming the guy whose name is always followed by the word “notwithstanding” in these discussions) that what they were doing wasn’t generally working, but you’re kind of pot-committed at a certain point, right? I mean once you’ve gone and printed $20 some odd trillion to buy up a bunch of assets, it’s a pretty hard turn to make to go out in front of the public and say “well, it doesn’t look like this is going to work after all.”

And although it’s still not generally “working” as far as the real economy goes, it’s as close to working as it’s going to get in Europe. Witness this morning’s inflation data. Here’s Bloomberg:

Inflation in the euro area picked up more than economists predicted though underlying cost pressures failed to accelerate, underscoring the European Central Bank’s struggle for price stability just days before officials debate the future of their stimulus program.

Consumer prices rose 1.5 percent in August after 1.3 percent in July, the European Union’s statistics office said on Thursday. That’s the highest reading in four months and exceeds the median forecast of 1.4 percent in a Bloomberg survey.

That’s still below target, but it’s not terrible and when you combine it with the other half-decent econ we’ve seen out of Europe, what you’re left with is a Mario Draghi who now finds himself in the strange position of having to suspend disbelief in the other direction.

That is, with the euro surging and with the political turmoil in Washington casting considerable doubt on the prospects for the U.S. economy, the ECB now needs to pretend like things are going worse than they actually are in order to justify a slower pace of policy normalization.