Draghi’s On-Again, Off-Again Hyperbole on QE

by on April 29, 2014 11:11 am BST

European Central Bank (ECB) President Mario Draghi’s on-again, off-again hyperbole about whether or not to participate in quantitative easing is growing tiresome, and it will likely lead to a continued confidence breakdown on central bank policy. To QE, or not to QE seems to be the question many market participants are asking themselves.

Draghi consistently tells the markets how important market participant confidence is in the central bank, yet, from week-to-week, ECB officials charge up quantitative easing rhetoric that range from negative deposit rates to an all-out asset purchasing program while nothing is ever implemented.

Once again, the central bank will be ready to do “whatever it takes” as low consumer prices take a hold of the eurozone. However, Draghi told German officials it is now unlikely that further quantitative easing will take place, since Germany has been the key objector of quantitative easing on a mass scale.

Economist see these comments as the light at the end of the tunnel – maybe the economy is getting better. Conversely, it shows that central bankers are nothing more than politicians in banker’s clothes, flip-flopping around topics as needed.