ECB Official Calls for Quantitative Easing

With the last two meetings o the European Central Bank each ending up with an interest rate cut, one of the ECB’s key policymakers believe it isn’t sufficient to boost the faltering Eurozone, and has publicly called for a quantitative easing scheme. According to comments made by the ECB’s Lorenzo Bini Smaghi, he cannot understand the hush-hush sentiment of the bank as regards the topic of quantitative easing, which he points out is used in the U.S. and the U.K. as the first move against deflationary risks.

While the ECB has, in their most recent economic forecast, said that they don’t believe deflationary risks exist for the Eurozone, Mr. Bini Smaghi believes that if conditions change the bank should reconsider QE, which he says is “tailor-made.” Analysts view his comments as an indication that the central bank might at least be considering expansion of the monetary tools at its disposal. Mr. Bini Smaghi, from Italy, will be relinquishing his post on the Executive Committee by year’s end to allow a representative from France to sit.

The bank’s tender this week of unlimited 3-year loans to the Eurozone’s banks was a good step according to many analysts but fell short of totally appeasing markets. Many expect that February’s offering of a similar nature will also be well received, but that ultimately the ECB will have to embark on some form of QE.

The Euro-Dollar is receiving a lift in early European trade, though more a factor of a retreating U.S. Dollar than a rebounding Euro. Most recently, the EUR/USD pair was higher at 1.3080 and OpenBook’s general populace is primarily bearish on the pair. Taking a more bullish stance, one of eToro’s top traders, jawaher2, had recently opened up several long positions, and yesterday closed a short with a 16% profit. Trader jawaher2 with more than 2300 followers and 350 copiers is on track to record a 12-month profit of nearly 163%.

Source: eToro Blog

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