Duncan’s Economic Blog

It could be worse…

Posted in Uncategorized by duncanseconomicblog on May 14, 2009

I’ve criticised the Bank of England for being too slow to cut rates last year. But the MPC do now, belatedly, seem to grasp how serious the problems are. The ECB on the other hand…

With the Eurozone economy expected to drop something like 4.1% next year, unemployment nearing double figures and concerns over the health of banks, one would hope the ECB would be responding decisively.

Instead, they’re having a very public argument.

Slovenia’s Marko Kranjec said yesterday the ECB is likely to spend more than the 60 billion euros ($82 billion) it has earmarked for covered-bond purchases and hasn’t ruled out acquiring corporate bonds and commercial paper. Hours later Germany’s Axel Weber, who had already said there’s no need to buy other assets, insisted 60 billion euros is the “maximum.” Slovakia’s Ivan Sramko said today nothing can be excluded.
“The ECB Governing Council looks like a battlefield,” said Laurent Bilke, an economist at Nomura International in London. “It would be simply ridiculous if we weren’t already in the middle of the worst recession in postwar history. But now it has more dramatic consequences. Trichet will have to restore some order.”


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