Draghi did the euro a lot of good in the near-term by taking a rate cut off the table. But in the bigger picture he’s done the ECB a disservice by leading the market to expect a rate cut at the December meeting only to change tack nearly 180 degrees at the following meeting. Central bankers are not supposed to react to each and every blip in sentiment and it appears that Draghi is doing just that.
What changed over the last month? Not a whole lot. There were improvements in financial markets but little improvement in the real economy. Makes you wonder why so many on the governing council were keen to cut last month…Not impressive.
