W/E: Weekly Support (updated)
AFTER
Monetary policy decisions – ECB
Introductory statement to the press conference – ECB
ECB Keeps Rates on
Hold as Officials Discuss New Measures – BB
ECB kept interest rates unchanged even after inflation in the euro area
weakened to the slowest pace in more than four years.
Draghi Says Officials Debate QE to Fight
Deflation Risk – BB
Mario Draghi said the
European Central Bank is ready to move deeper into uncharted territory in the
fight against deflation, with policy makers debating what form of quantitative
easing they might need to use.
ECB says ready to act if 'lowflation' lingers
too long – Reuters
ECB opened the door on
Thursday to turning on its money-printing presses to boost the euro zone
economy and keep inflation from staying too low.
ECB
Remains All Talk, No Action: Leaves All Rates Unchanged – ZH
All talk, no action. That's what, as usual, happened at the ECB today
where after much bluster and QE rhetoric from everyone including former
permahawk Jens Weidmann, the ECB did precisely as most had expected. Nothing.
ECB Does Nothing.
Yada, Yada, Yada – Marc
to Market
In the face of falling, inflation and weakening financial conditions,
despite the end of the economic contraction, the ECB stands pat and only offers
a reiteration of its threat of some unspecified action if needed.
5 Takeaways From
Mario Draghi’s ECB Press Conference – WSJ
No action but tough talk * QE is firmly on the table * Blame it on
Easter * ECB eyeing the euro * Back off, IMF
ECB hints at QE, but
it is really in trouble – TradingFloor
The ECB left rates unchanged and presented no new measures, but revealed
unanimous support for unconventional easing. That will be easier said than
done.
This is How Mario
Draghi Does a Putdown – WSJ
Mr. Draghi was explaining to reporters why the ECB’s governing council
had decided to take no action in response to a decline in the inflation rate to
0.5%, a quarter of the rate it targets. It’s a job he does well…
Euro the one that
they want, Central Bank reserve edition – FT
Why is the euro so strong? There are plenty of reasons, but one
additional factor has been confirmed by the latest data on global foreign
exchange reserves: central bank buying.
Great Graphic: ECB
Staff Forecasts of CPI – Marc
to Market
The ECB staff has been consistently over-estimating inflation and they
are at risk for doing so again.
No ECB easing despite
fear of stagnation – Danske
Bank
Hence, it seemed that Draghi tried to use his old strategy of verbal
intervention but it had only
a marginal market influence. Could it be that markets are starting to
get tired of soft words and now want action?
ECB meeting - The art
of doing nothing – Merkelnomics
From here on, a further verbal stepping up seems impossible. In a way
it’s a gamble, either the recovery continues and inflation picks up again, or
the ECB will have to act in June, even if it’s only a small refi rate cut.
Immobile ECB 'playing with fire' as deflation
draws closer – The
Telegraph
ECB president Mario
Draghi reveals 'there was a discussion of QE' but fails to take action once
again
ECB addresses the zero lower bound – FT
The risk of prolonged
inaction in the face of low inflation or mild deflation has now been sharply
reduced. Furthermore, Mr Draghi’s increasing emphasis on the exchange rate as a
key component in the ECB’s assessment of medium-term inflation makes it far less
likely that the euro will be allowed to rise further without running into a
policy response from the ECB.
Draghi QE
"Reflection" Drops Euro, Pops Bonds/Stocks – ZH
Italian Yields Drop
to Eight-Year Low on ECB – BB
BEFORE
Draghi Builds United
Front for New Push Against Deflation – BB
ECB Decision Day
Guide From Low Inflation to Quantitative Easing – BB
ECB Preview: Expect More Talk And No Action – ZH
ECB and Beyond – Marc to Market
The ECB should focus
on the threat of deflation rather than maintaining austerity – Europp
/ LSE
Is there a risk of
deflation in the euro area? – Bruegel
Reasons to do nothing – MacroScope
/ Reuters
PREVIOUSLY ON
MORELIVER’S
Mads Koefoed: Another drop in inflation has the rate cut drums going in
the euro area ahead of the ECB meeting. While I expect rates to stay unchanged,
it is with less conviction than in previous months. Other types of action are
also a possibility.
ECB decision coming up and the markets are hesitant as economists weigh
up the likelihood of action from the European Central Bank.
ECB will push banks to the limits with data requests for its upcoming
review of their books and insist on common treatment for all 128 banks, it told
Reuters, signaling it will not give way to complaints raised by lenders.
As far as currency traders are concerned, it’s going to take more than
words for Draghi to weaken the euro.
The euro area will probably avoid outright deflation as a “soft”
economic recovery gradually reduces spare capacity in the economy, ECB Vice
President Vitor Constancio said.
For all the fears of a Japan-style era of deflation, a more likely
threat for Europe is what IMF officials are calling lowflation.
We see the odds slightly in favour of further ECB easing this week. The
Governing Council has discussed more easing at the latest ECB meetings and we
think the balance will tilt this time. Our main scenario is a small refi rate
cut to 0.15%.
ECB policymakers have often said that the ECB shouldn’t react to single
changes in the inflation rate, but rather should see if lower inflation rates
translate into lower wages or price expectations.
Recent history suggests the ECB will only move in the case of an
emergency. President Mario Draghi promised to do “whatever it takes” to save
the euro when crisis threatened to overwhelm the single currency in the summer
of 2012. But since then, the details of quite how far the ECB might be willing
to go to meet its promise have been clouded.
ECB: The tone of official comments has turned more dovish and the BBK
appears to have eased its opposition to QE. However, the ECB still refuses to
recognize risks of deflation and sees "light at the end of the
tunnel"… Surveys suggest an
overwhelming majority do not expect the ECB to cut rates. Jobs: The shift in the Fed's forward guidance may encourage a
change in the market's focus. We suggest that average hourly earnings may be of
greater importance than the market often attributes to it.
Juhani Huopainen: Realised inflation continues falling, but the ECB may
find the options available in its toolbox to effect any change is limited. As
ever, it should be able to draw on a large reservoir of excuses, but its
credibility is in danger of running out.
Ultimately the ECB could be right and some day, as the banking system is
"restructured", the Eurozone's economy will heal itself. But that was
also the attitude in Japan years ago when the
nation undertook its banking reform. Yet deflation in Japan persisted for years
since then, becoming heavily entrenched in the economy. Is the ECB now willing
to take that chance?
Frances Coppola: I do not expect the ECB to do any significant easing at
the moment. But that doesn’t mean they won’t continue to talk about it. After
all, signalling has worked well so far.
The pace at which euro
zone banks are repaying their crisis loans to the European Central Bank has
slowed significantly as extra cash in the system reaches critically low levels.
Mario Draghi gave a big speech at Sciences Po Paris [this week] explaining
what mistakes were made in the euro-boom and euro-crisis years. It makes a lot
of interesting points and is almost Kruschev-like as far as regime
self-criticism goes.