Europe will miss Jean-Claude Trichet when he retires as president of the European Central Bank (ECB) at the end of October. He has shown the right mix of flexibility and rigour in helping to steer Europe through the debt crisis.
Last year, he showed pragmatism by getting the ECB up to purchase the bonds of high-debt nations. Critics said the ECB was indirectly funding Greek, Irish, Portuguese and Spanish borrowing, blurring the lines between fiscal and monetary policy and boosting inflationary risks. But the move provided those nations with a lifeline that kept the euro afloat as scores of economists were predicting the demise of the single currency.
Last Thursday, as Portugal became the third euro-zone country after Greece and Ireland to seek a bailout from its partners, Mr Trichet got tough, announcing the first rise in ECB interest rates since the 2008 financial crisis. He has ushered in a new cycle of monetary tightening ahead of the US Federal Reserve.
The well-flagged move to raise the main refinancing rate by a quarter point to 1.25 per cent will hit the euro zone's struggling peripheral economies, but it sent a clear message that despite the crisis, the ECB has not lost sight of its principal task - fighting inflation.
Consumer prices in the euro zone rose 2.6 per cent last month from a year earlier, up from a 2.4 per cent rise in February, fuelled by an oil price surge to 30-month highs amid the civil war in Libya and by commodity price inflation as the growing economies of China and India devour raw materials.
The ECB's inflation target is 2 per cent, and the bank needed to be seen to be acting to prevent a surge in inflation expectations in the euro zone. After all, Germany, which accounts for 27 per cent of the GDP of the 17-nation euro zone, is expected to grow by almost 3 per cent this year, after growth of 3.6 per cent last year. By contrast, Greece, Portugal and Ireland together make up just 6 per cent of the euro zone's GDP.
If the ECB's monetary policy were geared only to Germany, it would need to raise rates to somewhere near 3 per cent now. The modest rate rise makes sense because it limits the pain for weaker economies while making clear that the ECB stands ready to combat inflation. Most ECB watchers are predicting two more quarter-point increases this year to 1.75 per cent, with the next rise likely in July.
It is bad luck for Greece, Portugal and Ireland, where many homeowners have floating-rate mortgages and face a further strain on their disposable income on top of government austerity measures to get the national deficits under control.
But those nations might have ended up facing even greater cost increases if the ECB had done nothing on interest rates. Any inkling that the ECB was going soft on inflation would have worried Europe's bond markets and sent yields higher - forcing nations to pay even more to service their mountains of debt.
This is the first time in its history that the ECB has raised interest rates before the Federal Reserve, which is not expected to move until later this year at the earliest.
That is partly a sign of the growing influence of Asia's economy, whose soaring growth is leading to imported inflation in Europe.
The ECB's hike also reveals its lack of concern about the euro's rise to 14-month highs against the dollar.
The widening interest rate differentials between the US and Europe are likely to drive the euro even higher in the coming months, making European exports more expensive in dollar terms.
But Mr Trichet did not express worries about the exchange rate at his news conference on Thursday. It would not be surprising to see the euro reach $1.50 by the end of the year, a level that might start raising eyebrows at the ECB. By that time, unfortunately for Europe, Mr Trichet will be gone.