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There is interest in the ECB (honest)

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The ECB provides interest, not with the policy decision (no change - the very big idea of quantitative policy is too new). Rather, the release of ECB forecasts, if one takes the ECB forecasts seriously, may give a hint as to the duration of quantitative policy. The longer inflation is sub 2%, presumably the longer the policy endures (however ineffective the policy may be).
  • The ECB also has an opportunity to signal its views on Greece, with the issue of whether Greek bonds will be accepted as collateral. We think not, which allows the ECB to appease the Teutonic elements of the council, while not actually jeopardising Greek bank's access to liquidity.
  • Nothing is expected from the Bank of England, and the emphasis here is likely to be on the balance of power as signalled in the minutes a couple of weeks hence. With the Bank viewing oil and food price declines as temporary but stimulatory, the Bank's tone may turn out to be a little more hawkish.
  • The US has no policy decision, mercifully (even economists can only endure so many central bankers in one day). However, there are revisions to unit labour cost data (costs to be revised higher). Unit labour costs contribute over 60% to US CPI inflation. Wage pressures, albeit moderate wage pressures, were noted in yesterday's Beige Book.