Central banks’ comments: lack of details

For our analysis on the ECB’s Governing Council meeting on 2 August, please see our Flash note No big step from the ECB. Since then, several official comments were made in order to dampen expectations about rapid bond purchases. No surprise that the more severe comments are from Germany with former ECB chief economist Otmar Issing stating that ECB bond buying is wrong. Benoît Coeuré (member of the ECB’s executive board) stressed the irreversibility of the euro but claimed that the ECB should ensure that central bank loans help small and medium-sized enterprises and consumers. Mario Draghi made it clear and simple: the Spanish government now has the floor. If Mr. Rajoy does not officially seek EFSF’s aid (and accept conditionality), nothing will happen. Time for action has not come yet in the eurozone but it is noteworthy that, until then, the magic “whatever it takes” Mario Draghi’s formula seems to be efficient on peripheral rates (see chart) despite the lack of details.

In the US, the message from 1st August FOMC statement is that monetary policy will be data dependent: “The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labour market conditions in a context of price stability.” This conclusion sounds like QE3 as the labour market is still depressed: despite the 172 000 net job creations in the private sector for July, the monthly average stands at 151 000 so far this year (compared to 175 000 in 2011) and the unemployment rate rose to 8.3%.

Das vollständige Strategie-Update im pdf-Dkoument