Post Tagged with: "quantitative easing"

QE is fiscal policy

QE is fiscal policy

By Frances Coppola A new paper by Johnston and Pugh of the legal department of the University of Sheffield discusses the legality and the effectiveness of QE and its relatives, including the ECB’s OMT “whatever it takes” promise. The background to this is the German Constitutional Court’s ruling that OMT amounts to monetary financing of government deficits and is therefore […]

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This was the most easing Draghi could get and still achieve unanimity

This was the most easing Draghi could get and still achieve unanimity

This is a brief update to my last member post from this morning. Just reviewing what the ECB has done here, we see them taking four out of the five easing measures I outlined in May. The ECB could lower rates. Check The ECB could allow its balance sheet to rise. The ECB has been sterilizing the 170 billion euros […]

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The negative German reaction to potential unconventional measures at the ECB

The negative German reaction to potential unconventional measures at the ECB

Yesterday and today, the German newspaper Frankfurter Allgemeine Zeitung had interesting articles on the ECB’s dilemma from a German perspective. I want to use these as a jumping off point for a discussion about Europe. The question is how much leeway will the Germans give the ECB to ease monetary policy now that recovery has solidified somewhat and inflation is […]

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Why the ECB will become more activist in June

Why the ECB will become more activist in June

I am skipping the news links today to go right to the daily commentary. I want to continue my thoughts on what’s happening in Europe and why I think the ECB will become more activist. There are a number of policy options on the table for the ECB including continuing to stand pat. But given both what ECB board members are saying and what the Lisbon Treaty defines as the ECB’s mandate, I believe we are about to see a big shift in policy toward greater activism. I’ll explain why below.

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On an ECB tax on reserves, QE and other easing

On an ECB tax on reserves, QE and other easing

What is the ECB likely to do come June? There has been a lot of speculation in the media about the ECB’s next move but the ECB has yet to make definitive statements on which way it is leaning and why. I believe quantitative easing is out of the question but I also believe the ECB is likely to ease in some manner come June.

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On reaching for yield and ECB QE

On reaching for yield and ECB QE

I believe investors are reaching for yield and there are multiple signals indicating such. This is a direct outgrowth of easy money policies by central banks as  nominal yields are at record lows and real yields are negative. Investors, particularly pension funds, are having a hard time adjusting to the new monetary regime of financial repression and low nominal returns. […]

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ECB Action: Just a Question of Time?

The Managing Director of the IMF and the chief economist are making no bones about it. More action by the ECB is inevitable. It is “just a question of timing,” says Lagarde and “sooner was better than later”, chimed Blanchard, the chief economist. The market is less sanguine.

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On Europe’s move toward QE to prevent deflation

There is a battle within the European Central Bank. Some want to take stronger action. Others do not think it is necessary. It is not just a matter of counting up who is on what side of the issue. It is not simply about majority rules. The ECB seeks consensus. As is well appreciated, there are important political and legal obstacles to buying European sovereign bonds.

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European, Japanese, and Ukrainian-Russian deflation

European, Japanese, and Ukrainian-Russian deflation

This isn’t a theme post. It is more like the posts I now do on Friday with a bunch of different ideas on important topics. But the underlying theme that interconnects the ideas is a deflationary-style slowdown. First, in Europe, the CPI is now at a 5-year low of 0.5% for Euroland. Everyone is talking about the prospects of deflation […]

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More Thoughts about Potential for QE from the ECB

More Thoughts about Potential for QE from the ECB

By Marc Chandler There seems to be a stepped effort by ECB officials to talk the euro down. The process began with Draghi last week indicated that the euro has become a more salient factor as it poses a deflationary risk and threatens the fragile economic recovery.  Earlier today, Bundesbank President Weidmann specifically did not rule out quantitative easing but […]

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The move from QE to forward guidance has always been about normalizing policy

The move from QE to forward guidance has always been about normalizing policy

So finally we get to see what the Yellen Fed is all about. And it is not as dovish as people thought it would be.While the noises Yellen made concerning the jobs market came across as dovish, behind the scenes a more hawkish tone has developed at the Fed. The fact is the move from QE to forward guidance has always been about normalizing policy – and that is tightening. The Fed has been telling us this for a year now. But only now are people understanding it means hikes are coming sooner than later.

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The Fed and the Return of Ad Hockery

The Fed and the Return of Ad Hockery

By Marc Chandler There has been sharp rise in US interest rates and the dollar in the immediate response to the Federal Reserve’s statement. The key it seemed was the expectation that Fed funds would be at 1% at the end of next year. This is more than the market had expected. The December Fed funds futures were implying a […]

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