The ECB’s governing council was divided today over monetary policy. While rates were left unchanged at 1%, a minority of the governing council wanted a rate cut. This may make an early rate cut more likely
Not everyone at the insane European Central Bank is insane.
This is very good from Martin Wolf:
Before now, I had never really understood how the 1930s could happen. Now I do. All one needs are fragile economies, a rigid monetary regime, intense debate over what must be done, widespread belief that suffering is good, myopic politicians, an inability to co-operate and failure to stay ahead of events. Perhaps the panic will vanish. But investors who are buying bonds at current rates are indicating a deep aversion to the downside risks. Policy makers must eliminate this panic, not stoke it.
This is very bad from Alister Heath:
Financial markets behaving like a bunch of addicts convinced their next fix – bailouts or cheap central bank money – on its way. Pathetic.
I have no idea what Heath, editor of City AM, is talking about. I can only presume he is worried that the world’s central banks are taking too much risk onto their books and hence socialising risk, or that they are being too inflationary. The second seems laughable and the first seems sensible. Government’s have a lot of risk baring capability at the moment and the private sector doesn’t.
We have a political class, in Alister Heath, who see suffering as noble and effective policy as immoral. The only small sliver of hope is for those “doves” in the ECB to make headway and begin to oust people. You can’t change Mario Draghi or Alister Heath, but you can run them out of town. It seems like those are the only things which are going to work.