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