ECB's Muller: There is no strong case to resume bond buying

Author: Adam Button | Category: Central Banks

More hawkish ECB talk

I'm beginning to think that nothing is coming on Sept 12.
  • Rate cut should be first option if action needed
  • Going into next week's meeting with an open mind
  • Market expectations on stimulus have gone too far
  • More QE disproportionate without deflation risk
  • Tiering reduces stimulative effect of rate cut
So we may get a 10 bps cut and nothing else. Several ECB policymakers, including Muller last week, who have had comments along these same lines.

What's tricky is determining how the market will react to a lack of action. Normally a hawkish surprise is positive but there's a decent risk the market concludes that the ECB is no longer helpful to the economy and sells the euro on expectations of slower growth.

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