More Dovish Comments from ECB Today
Skerdian Meta • 2 min read
Earlier today, we posted comments from the vice president of the European Central Bank, Louis de Guindos. One of the main comments was that the ECB won’t reach limits on the QE program shortly, suggesting that the QE program will continue for a long time.
Now, ECB governing council member Bostjan Vasle is adding to that dovish tone. He made some comments a while ago, which are as follows:
- September stimulus package is working
- But if situation changes, there is room for lower rates
- No reason now to alter Eurozone growth prospects
- The economy is developing as projected by the ECB
- Industry remains weak but services and labour market more positive
No reason to alter growth prospect for him, but the Eurozone economy is pretty close to recession, so this is not a positive thing. Services and the labour market is seen as more stable, but they have also been affected by the recession in manufacturing and industry in general.
The most dovish remark though, is the comment about lower interest rates if the need arises. Deposit rates already stand at -0.50% after the rate cut in September. Such comments should keep the Euro down in the long run.
ECB main economist Philip Lane also made some comments.
- Disorderly Brexit is less likely but if so, the ECB and BOE have worked closely together in last two years
- Brexit is less of a big deal for Eurozone economy than the UK
- We are worried about the impact of Brexit on Ireland
- Europe needs a ‘big conversation’ among fiscal policymakers about how to stimulate economy
The last comment shows that the ECB is in a bit of a panic, begging the Eurozone government to cooperate in launching a major fiscal stimulus. The monetary policy is not showing any great effect, despite the ECB saying that the stimulus package is working. Manufacturing and the industrial sectors still remain in contraction.