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15 Apr 2015
Draghi elaborates on their goal to continue QE – TDS
FXStreet (Barcelona) - With ECB providing only minimal tweaks to the previous message, Richard Kelly, Head of Global Strategy, TD Securities, highlights the key interesting changes by the central bank council.
Key Quotes
“In terms of the interesting changes within the prepared remarks, the Governing Council:
Upgraded the risks to economic growth from “downside but have diminished” to “more balanced” so the trends continue to move in the right direction.
Elaborated on their goal to continue QE until they see a “sustained adjustment in the path of inflation” consistent with the target, to now noting that they are looking at “trends in inflation” which means they will look through any transient noise.”
“Much of today revolved around anything new he might have seen after a full six weeks of buying and on this, Draghi suggested zero concerns with implementation, all as expected. He said that scarcity worries are “exaggerated” and at the very least “premature.” The latter suggests Draghi could envisage a scenario where liquidity in EGB markets somewhere becomes an issue, but it is not something that will drive policy until it is likely or materializes.”
“He said that a protracted period of time of very low interest rates could be conducive to financial instability but so far they have not seen any sign of a bubble. He then went on to note that even if they did sense these risks coming, they would be dealt with by macroprudential measures, rather than seeing this as a reason to change QE.”
Key Quotes
“In terms of the interesting changes within the prepared remarks, the Governing Council:
Upgraded the risks to economic growth from “downside but have diminished” to “more balanced” so the trends continue to move in the right direction.
Elaborated on their goal to continue QE until they see a “sustained adjustment in the path of inflation” consistent with the target, to now noting that they are looking at “trends in inflation” which means they will look through any transient noise.”
“Much of today revolved around anything new he might have seen after a full six weeks of buying and on this, Draghi suggested zero concerns with implementation, all as expected. He said that scarcity worries are “exaggerated” and at the very least “premature.” The latter suggests Draghi could envisage a scenario where liquidity in EGB markets somewhere becomes an issue, but it is not something that will drive policy until it is likely or materializes.”
“He said that a protracted period of time of very low interest rates could be conducive to financial instability but so far they have not seen any sign of a bubble. He then went on to note that even if they did sense these risks coming, they would be dealt with by macroprudential measures, rather than seeing this as a reason to change QE.”