ECB’s Praet blames unrealistic expectations for ECB’s Dec disappointment
By FXStreet FXStreet (Mumbai) – In an exclusive interview with Handelsblatt, the ECB’s chief economist Peter Praet, blamed markets’ unrealistic expectations and the quiet December period for the central bank’s disappointment. Although he left doors open for further easing next year.
Key Quotes:
“The problem was that the markets’ expectations grew ever bigger in the meantime and were persisting, even though the most recent economic data had been encouraging.”
“One big problem was that, during the quiet period…”
“If expectations get out of control, we, as the central bank, will try to correct it. But that simply cannot be done during the quiet period.”
“There are two schools of thought among the critics on the Council. Some say they’re unnecessary because the economic situation isn’t that bad at all. For instance, they don’t regard the development in inflation expectations as being so dramatic.”
“Others say that, because of the special nature of a currency union, such asset purchases should only be used if we are in a deflationary situation. This point can be discussed at length.”
“We have clearly said that we are ready to do more, if this (became necessary.”
“The precise choice of instruments cannot be determined long in advance; it is based on the specific …read more
Source:: FX Street
