ECB recap: everything, all at once in June - RBS

By | Updated July 30, 2014 AAA

FXStreet (Guatemala) - Analysts at RBS broke down and recapped the current standing from the ECB.

Key Quotes:

“The Governing Council unveiled a number of measures at the June press conference: a baby rate cut; an extension of fixed rate full allotment (FRFA); an extension of the credit claims collateral framework; the termination of the SMP drain; a new so-called 'targeted' LTRO; and an announcement that the Council was accelerating work on a potential ABS purchase programme”.

“There seems little doubt that the 'everything, all at once' nature of the policy response was a deliberate tactical choice. For example, Executive Board member Yves Mersch was happy to report in mid-May that 'we are working on a broader range of instruments than might even strike the most fertile imagination of journalists, for example, or an analyst'.”

“We suspect that the logic behind the flurry of activity in June was the following: if the Council could not or would not agree a game-changing policy response then the next best thing was announcing a large number of innovative but nonetheless minor measures that would dampen down the incessant demands for action”.

“In truth we do not believe that all of the policy measures that the Council agreed are 'minor'. Indeed, we suspect that the full ramifications of one of the decisions that the Council agreed may have been lost in the deluge of announcements. With that thought in mind let us turn to discuss the TLTRO”.

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