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FMario Draghi (C), President of the European Central Bank (ECB), speaks alongside Luis de Guindos, Vice President of the European Central Bank (ECB), and Christine Graeff, Director General of Media Communications in the wake of of a meeting of the ECB Board of Governors at the headquarters of the ECB of 7 March 2019 in Frankfurt, Germany.
Thomas Lohnes | Getty Images
Two senior officials attempted to moderate market expectations for an immediate quantitative easing program launched by the European Central Bank (ECB).
In the early summer, ECB President Mario Draghi said he was considering new options to support the economy of the 19 eurozone members, stressing that the government of the euro zone is not the only one. one of the possibilities included a new asset purchase program to boost lending and boost inflation.
Investors applauded his accommodating remarks with ECB members such as Francois Villeroy de Galhau, stressing that a major bond buying program, also known as QE, could step in. the coming months if necessary.
But as investors prepare for the next ECB meeting on 12 September, two particularly hawkish members of the eurozone's central bank have decided to put reality back into the debate.
"In my opinion, based on the current data, it is much too early for a huge package," said Sabine Lautenschlaeger, executive board member, in an interview with Market News this week, published on Friday. the ECB.
"I am still convinced that the Asset Purchase Program (APP) is the ultimate ratio, and it should only be used if you run a risk of deflation; the risk of deflation does not appear nowhere. "
A member of the ECB and head of the Dutch central bank, Klaas Knot, added his own words of caution. "If the risks of deflation return to the agenda, then I think that the asset purchase program is the appropriate instrument to be activated, but this is not the case. not necessary in my reading of the inflation outlook for now, "he told Bloomberg Thursday.
However, market reaction has been moderated since these comments, with European equities posting gains on Thursday and Friday. Rabobank analysts explained that traders already knew that there was not unanimity among ECB board members on QE.
They also pointed out in a research note that the reason the hawks "state their objections so forcefully is that they know it is very likely that the app will be restarted imminently".
If implemented, it would be the second time in its history that the central bank announced a massive program of direct money injection into the euro zone economy.
Erik Nielsen, Chief Economist at UniCredit, announced last week that QE would be launched in September and could reach between 300 billion and 400 billion euros ($ 333.07 and $ 444.10 billion) over a period of nine months.
The euro zone is still struggling to cope with low inflation and significant growth. According to the latest central bank forecast, in June, overall inflation is expected to reach 1.3% in 2019 – the ECB's target is "lower but close to 2%". In terms of growth, the central bank is expecting 1.2% growth this year, after a growth rate of 1.8% in 2018.
Silvia Dall & # 39; Angelo, Senior Economist at Hermes Investment Management, told CNBC by email last week that he did not rule out an open approach from the ECB.
"An official of the ECB has recently called for more action.A more important program than less ambitious is likely, 45 billion euros per month for a year," he said. declared.
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