Not surprisingly and in stark contrast to the Fed, the always hawkish ECB member Axel Weber wants to now phase out “permanently” securities purchases of sovereign bonds. In terms of timing the exit strategy, he believes the risks of unwinding their policies too late are greater than exiting too early. While the Fed has purposely inverted the yield curve to provide a way for banks to earn their way to a better balance sheet, Weber said monetary policy is “inappropriate” to fix banks problems. Bottom line, the comments are nothing new from Weber as he was the 1st to speak out against ECB bond purchases but the commentary certain lends credence to the rally in the Euro off the lows of June in that it presents a clear difference of his view of the proper function of monetary policy as opposed to the Fed’s.

Category: MacroNotes

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

One Response to “And no wonder why the Euro has rallied”

  1. gusgus says:

    Interesting post, of course Weber and the ECB have the luxury of a much broader social safety net which allows a fiscally more hawkish tone. The US, because of its weaker unemployment insurance and welfare policies, requires a more active intervention into its economy during downturns, be it monetary or fiscal stimulus. Germany, on the other hand, with its larger automatic stabilizers, can be more hawkish on monetary policy.