2021: A NIRP Odyssey (Or, ‘Panic’)

2021: A NIRP Odyssey (Or, ‘Panic’)

Was the Q1 deceleration in eurozone economic activity in fact "transitory" as policymakers would have markets believe? That sounds like a boring question (and in some respects it is), but in the context of the ECB's exit strategy from stimulus it's enormously important. At the June ECB meeting, Mario Darghi earned plaudits for pulling a dovish rabbit out of a hawkish hat, simultaneously slapping a sell-by date on ECB asset purchases while adding calendar-based forward guidance on rates which,
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One thought on “2021: A NIRP Odyssey (Or, ‘Panic’)

  1. Thanks H.

    When I saw how relatively dovish Draghi was at that last meeting I looked down and shook my head. There’s a short window available to exit QE and FFR suppression, and they’ve clearly chosen the least immediately painful route. Everything comes at a price.

    Sacrifice now to ease the pain later, or do what needs to painfully be done now, to pave the way for a more promising future.(decent real economic growth and productivity). They are choosing the route of Japan. Their window of opportunity is closing. For the addict, there’s never a good time and there is always an excuse. In 2 years, there will be a whole new range of issues to contend with. More excuses.

    “And “in any case” (to employ the Draghi vernacular), market pricing doesn’t see an exit from negative rates for the ECB until damn near 2021:……”

    “After Europe’s cliff-like divergence in Q1, broad signs of a Q2 rebound did not emerge, contrary to our expectations. Whether we should “give up” on European growth is a central question now, which we try to answer by addressing what went wrong in the first place.”

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