The small steps of the european central Bank

Chronic. This is the kind of details sibylline for the general public, but that the specialists of the european central Bank (ECB) – the ECB watchers, in English – love to dissect in every direction. Thursday, march 8, at the conclusion of its meeting, the monetary institute has published a press release where it confirms that it does not extend its purchases of public debt and private (the quantitative easing programme, in English, or QE), today 30 billion euros per month, beyond September. On the other hand, it has removed the formula according to which it could increase the volume.

On the merits, this does not change large-thing, because the likelihood of the ECB to inflate its purchases of debt beyond the next school year was very low, his whole strategy is to gradually reduce the volume. Conversely, in the event of an economic shock major is likely to plunge the european growth, there is no doubt that its president, Mario Draghi, attentive to everything that is likely to hurt activity in the euro zone, will not hesitate to increase the volume of QE, if it deems necessary.

On the form, on the other hand, the signal is important. By removing this formula, the ECB made a small step closer, careful and symbolic, to the return to normal of its policy. But not only that : it also tries to disconnect the QE inflation outlook, always flat. And this, in order that the markets will focus solely on the single purpose of the redemption of debt, but on the whole of monetary instruments – to begin with the rates. Slowly, subtly, the institution changes its “guiding expectations” (forward guidance, in English), that is to say, its communication with the markets, which is essential to the success of its measures.

Avoid gender bias

Thursday, march 8, the guardian of the euro also made another small step, of a very different nature….

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