Posts by "duva"

Regarding ECB rate hikes and withdrawal of non-standard measures, there are a couple of points I think should be stated

The ECB's primary mandate is price stability and when watching JCT on the monthly PC during the last months (say from Nov), it is clear that he personally feels very satisfied with the track record the ECB has achieved during his term in office. He will not risk this record during his final 6 months in office!

There is also the move towards making the individual countries responsible for providing their banks with cash. The Irish CB has increased their lending using a rule that allows them to create cash, subject to ECB approval. Spain has also gotten the message and are leaning heavily on their regional/local banks.

The ECB has also learned the lesson that if they make a problem go away from the headline news, politicians will treat it as if it was solved. I'm referring to the purchasing of peripheral bonds. There has been signals from the ECB that they want to unload the 70B or so of bonds from their balance sheet and indirect that there is a limit on how much the ECB can/will hold. The political camp has been mute on this aspect but instead transformed the ECB proposal that the ESFS should by the ECB holdings to one where the ESFS funds should be used to buy more bonds from the market (Lesson: never provide a "how" to a "what" since your "how" will be stolen to solve another "what".)

In sum, JCT & the ECB are moving towards a position that the situation is, or should be, normalizing and that the political camp is responsible for that to happen - it is a sort of a fait accompli play and a rather sharp move for a non-political body...

I realize that I'm really wading in deep here with this first post, but the aspects that I bring up have not been discussed much in this forum.