File this one under “It’s always sunny in Frankfurt”. ECB chief economist Stark says there is no general credit crunch in Europe and that lending was growing rapidly through November before slowing in December and January.
ECB rate moves are not at all tentative but ECB wants to avoid aggressive moves. Aggressive moves must be defined as moves of 1.00% or better, given that the ECB cut 75 bp in October.
The ECB will be prudent and act with a sense of proportion on rate moves.
Stark, a former Bundesbank economist, was one of those who lead the market to anticipate a pause in the ECB cutting cycle in January before events dictated that they cut another 50 bp last Friday.
