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27 Jan 2014
Flash: ECB comments signal end of Davos - Danske Bank
FXstreet.com (Barcelona) - Christin Tuxen, Senior Analyst at Danske Bank notes that as the annual World Economic Forum in Davos came to an end over the weekend ECB comments took centre stage.
Key Quotes
“ECB’s Knot’s (of De Nederlandsche Bank) comment that there is currently no need for the central bank to take action in response to recent jitters in euro-area money markets drew some attention.”
“However, although ECB head Draghi downplayed the risk of deflation in the euro-zone otherwise brought forth by IMF’s Lagarde, Draghi at the same time remarkably said that while the Treaty prohibits quantitative easing when it comes to government bonds, he would be open to the ECB buying packages of bank loans to the private sector, provided these be simple enough that a transparent rating and pricing could be done.”
“Although a refi – and possibly also a deposit – rate cut may be in store for the coming months if we are right in projecting downside inflation surprises, Draghi’s comments suggest the ECB may not be as reluctant to go down the route of a QE scheme as previously thought.”
Key Quotes
“ECB’s Knot’s (of De Nederlandsche Bank) comment that there is currently no need for the central bank to take action in response to recent jitters in euro-area money markets drew some attention.”
“However, although ECB head Draghi downplayed the risk of deflation in the euro-zone otherwise brought forth by IMF’s Lagarde, Draghi at the same time remarkably said that while the Treaty prohibits quantitative easing when it comes to government bonds, he would be open to the ECB buying packages of bank loans to the private sector, provided these be simple enough that a transparent rating and pricing could be done.”
“Although a refi – and possibly also a deposit – rate cut may be in store for the coming months if we are right in projecting downside inflation surprises, Draghi’s comments suggest the ECB may not be as reluctant to go down the route of a QE scheme as previously thought.”