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27 Nov 2014
ECB may become compelled for a more radical approach - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank noted that qualitative or credit easing (CE) has played a dominant role in the ECB’s measures in recent years.
Key Quotes:
“Because the focus in these measures is on the repair of the mechanism that transmits the ECB’s monetary policy to the private sector. In this research note we take a closer look at the question whether the policy has been successful and/or whether it will be so in the coming years. Specifically, we look at the interest-rate pass-through channel”.
“The sobering conclusion is that even when we focus on the pure ‘pricing’ component (the rates charged on new loans), the impact of past and recent measures appears to be disappointing”.
“We would highlight the lack of growth as one of the stumbling blocks, especially when seen in a broader context of financial institutions still being focused on de-leveraging”.
“This, in turn, leads us to believe that if growth will continue to disappoint, the ECB will feel compelled to shift to more radical, quantity-oriented, policies”.
Key Quotes:
“Because the focus in these measures is on the repair of the mechanism that transmits the ECB’s monetary policy to the private sector. In this research note we take a closer look at the question whether the policy has been successful and/or whether it will be so in the coming years. Specifically, we look at the interest-rate pass-through channel”.
“The sobering conclusion is that even when we focus on the pure ‘pricing’ component (the rates charged on new loans), the impact of past and recent measures appears to be disappointing”.
“We would highlight the lack of growth as one of the stumbling blocks, especially when seen in a broader context of financial institutions still being focused on de-leveraging”.
“This, in turn, leads us to believe that if growth will continue to disappoint, the ECB will feel compelled to shift to more radical, quantity-oriented, policies”.