Just like at the Federal Reserve, where voting vocal doves and hawks are split roughly across the middle, with half advocating no rate cuts, and the other half pushing for 2 or more cuts, so the ECB's uber-dovish Mario Draghi is now facing a potential mutiny on his hands ahead of next Thursday's critical monetary policy meeting when the ECB is expected to not only cut rates but potentially reactivate its bond purchasing program.
Today, another hawk emerged when Estonian central bank head Madis Muller joined the swelling ranks of officials skeptical over the need for a large stimulus package by saying a resumption of bond purchases now would be disproportionate to economic conditions.
As a result, banks among which Goldman, Nomura, and ABN Amro expect a new round of quantitative easing to be unveiled next week, while investors are pricing in at least a 10 basis-point cut in the deposit rate.
Muller said there is still room to cut rates further below zero, at the same time warning that the ECB should be wary of easing the pain for banks.
As Bloomberg notes, the surprisingly vocal opposition to QE could spell trouble for President Draghi, who has already "Forward guided" investors for some form of support for the economy as it's battered by trade tensions and Brexit, however while a rate cut is certainly expected, the lack of QE will certainly disappoint stock markets.
That split between doves and hawks makes the position of Bank of France Governor Francois Villeroy de Galhau, monetary chief for the euro zone's second-largest economy, potentially critical for market expectations over what officials will deliver when they meet on Sept. 12.
To others this is not enough, and banks including Goldman, Nomura, and ABN Amro expect the announcement of a new round of QE. However, with such vocal opposition to even more QE - easing which will be self-defeating as it cripples European banks and sends their stock prices to new all time lows, likely triggering the failure of such giants as Deutsche Bank and Commerzbank - it is unclear just how Draghi will negotiate with the mutineers.
https://www.zerohedge.com/news/2019-09-03/mutiny-ecbounty-draghi-showdown-qe-hawks-ahead-critical-meeting
Today, another hawk emerged when Estonian central bank head Madis Muller joined the swelling ranks of officials skeptical over the need for a large stimulus package by saying a resumption of bond purchases now would be disproportionate to economic conditions.
As a result, banks among which Goldman, Nomura, and ABN Amro expect a new round of quantitative easing to be unveiled next week, while investors are pricing in at least a 10 basis-point cut in the deposit rate.
Muller said there is still room to cut rates further below zero, at the same time warning that the ECB should be wary of easing the pain for banks.
As Bloomberg notes, the surprisingly vocal opposition to QE could spell trouble for President Draghi, who has already "Forward guided" investors for some form of support for the economy as it's battered by trade tensions and Brexit, however while a rate cut is certainly expected, the lack of QE will certainly disappoint stock markets.
That split between doves and hawks makes the position of Bank of France Governor Francois Villeroy de Galhau, monetary chief for the euro zone's second-largest economy, potentially critical for market expectations over what officials will deliver when they meet on Sept. 12.
To others this is not enough, and banks including Goldman, Nomura, and ABN Amro expect the announcement of a new round of QE. However, with such vocal opposition to even more QE - easing which will be self-defeating as it cripples European banks and sends their stock prices to new all time lows, likely triggering the failure of such giants as Deutsche Bank and Commerzbank - it is unclear just how Draghi will negotiate with the mutineers.
https://www.zerohedge.com/news/2019-09-03/mutiny-ecbounty-draghi-showdown-qe-hawks-ahead-critical-meeting
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