Back
7 Jan 2014
Flash: Don't confuse inaction with indifference, and ECB Preview - RBS
FXstreet.com (London) - Strategists at RBS said they expect a “No change” from the ECB this week.
Key Quotes:
“We expect no change in the policy stance this month, despite the weak macro outlook in the Eurozone”.
“More action requires more pain: We suspect there has to be material downside news relative to the latest December projections to unlock further stimulus”.
“Ready, willing and able: We expect President Draghi to continue emphasising that absence of action should not be interpreted as a signal that the Council lacks the stomach for the fight to preserve price stability”.
“Acting within our forward guidance: The use of unconventional weapons in the arsenal will be governed by the same conditions that govern rate cuts”.
“Don't expect advance warning: With the easing bias in play, expect the Council to act immediately if the outlook deteriorates without indulging in the theatre of yesteryear (code words, waiting for the next set of projections and so on)”.
“Let the punishment fit the crime: Conservative central banks might wish to pull one unconventional lever at a time, but a sudden and significant deterioration may force the Council to engage in 'shock and awe' and pull multiple levers at once”.
“Council will choose the unconventional path of least resistance: The Council will favour those unconventional policy levers that are both simple to implement and whose impact is easiest to quantify. On that basis...”
Key Quotes:
“We expect no change in the policy stance this month, despite the weak macro outlook in the Eurozone”.
“More action requires more pain: We suspect there has to be material downside news relative to the latest December projections to unlock further stimulus”.
“Ready, willing and able: We expect President Draghi to continue emphasising that absence of action should not be interpreted as a signal that the Council lacks the stomach for the fight to preserve price stability”.
“Acting within our forward guidance: The use of unconventional weapons in the arsenal will be governed by the same conditions that govern rate cuts”.
“Don't expect advance warning: With the easing bias in play, expect the Council to act immediately if the outlook deteriorates without indulging in the theatre of yesteryear (code words, waiting for the next set of projections and so on)”.
“Let the punishment fit the crime: Conservative central banks might wish to pull one unconventional lever at a time, but a sudden and significant deterioration may force the Council to engage in 'shock and awe' and pull multiple levers at once”.
“Council will choose the unconventional path of least resistance: The Council will favour those unconventional policy levers that are both simple to implement and whose impact is easiest to quantify. On that basis...”