ECB Ready to Print, Germany Ready to Scream!
- ECB ready to print, Germany ready to scream!
by Ambrose Evans-Pritchard, http://www.telegraph.co.uk/
The doves are seizing control of the European Central Bank. They are already laying the ground work for a blitz of Anglo-Saxon QE, whatever the Germans, Dutch, Austrians, and Finns (?) have to say about such wicked Latin conduct.
Welcome to the next fascinating phase of the EMU opera buffa, opera tragica. The ECB’s Peter Praet – the board member in charge of setting economic policy debates – has given an astonishing interview to Brian Blackstone at The Wall Street Journal, opening the floodgates for bond purchases.
It is clear that the slide towards deflation and Euroland’s fizzling recovery have caused a revolt at long last. The ECB’s Latin (plus) majority simply refuses to accept Bundesbank orders any more.
“If our mandate is at risk we are going to take all the measures that we think we should take to fulfil that mandate. That’s a very clear signal,” said Mr Praet.
“The balance sheet capacity of the central bank can also be used. This includes outright purchases that any central bank can do. The rules do not exclude that you intervene in the markets outright.”
“For some decisions it’s easier than others [to gain consensus]. One thing is clear: the Governing Council has been able to decide. That’s really the message.”
So there you have it. This had to happen since deflation in southern Europe is causing debt dynamics to go berserk, defeating any of the alleged gains from the rest of EMU policy. Nations have to protect themselves.
“That is a radical change of position for the ECB and a very welcome one in our view,” said Ken Wattret from BNP Paribas. “This is the most explicit signal yet from an ECB official that balance sheet expansion via asset purchases is on the radar.”
“The patience of the majority of Council members towards the ‘blocking minority’, which has led to a worryingly slow policy response to persistent below-objective inflation to date, has been exhausted. The plunge in inflation in October has been the trigger.”
Reblogged this on Catholic Glasses and commented:
I will pray for Germany and ECB
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