ECB Villeroy
- He supported many elements of new stimulus package including state dependent forward guidance and tiering introduction
- Forward guidance is now 'strongly state based' and that is significant progress perhaps currently overshadowed by QE focus
- thought further asset purchases are unnecessary right now given very low levels of long term interest rates and term Premia
These comments are in keeping with reports that he dissented on QE. Villeroy is a dove and he is focusing here on the ECB's new line looking for fiscal stimulus from the Government to supper the economy. I agree with Villeroy that the market has not fully grasped this positive shift. This has got to illicit some kind of response eventually and it is likely to be a tradable shift when it comes.
