Thursday, April 4, 2013

ECB Worries About Fiscal Policy 3 Times More Than Monetary Policy!

Very unlike the central bank it was before the crisis, or even much after it.

As expected, ECB finally accepted that all was not really well with euro area economy and a recovery in the 2nd half is far from certain. And without any "precommitment", accepted as much as there will be some visible actions in "next few weeks" as they have had "extended" discussion over rate cuts. Which is markedly dovish compared to March meeting.

It was also obvious ECB, without any major helps from governments and bound within the mandate, is at a risk of running out of tools. Mr Draghi summarized today's statements on monetary policy in 35 words, and then went on to spent 100 words to summarize what he expects in terms of fiscal policies Expect the belly grinding higher in a rally in expectation of a rate cut. And long end poised for a come-back selloffs on any good sort of good news, from euro zone or the outside world

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