ECB speakers advocated fiscal easing

Deutsche Bank analysts point out that we heard from a number of ECB Governing Council members over the last 24 hours with the ECB’s Chief Economist Philip lane advocating fiscal easing.

Key Quotes

"He said “If there were fiscal expansion in these current conditions, the multiplier will be quite big. This goes back to finance ministers thinking about fiscal policy as a macro tool.” On growth, he said “Our assessment is that we’re not at the edge, but of course we’re closer to the edge than we were.” However, Bundesbank President Jens Weidman, who also spoke overnight was measured in his response on fiscal easing as he said that while some additional spending might be possible in the short term, “with respect to macroeconomic stabilization, any further stimulus appears unnecessary, unless a perceptible deterioration in the economic outlook becomes apparent. Germany’s output gap is about to close and forecasts don’t foresee a marked deterioration.”

“On the other hand, Dutch governor Klaas Knot and French Governor Francois Villeroy de Galhau both called for a review of both the ECB and EU’s economic strategy with Klass Knot saying that the ECB could increase its flexibility by introducing a symmetric band around the inflation aim, and governments could simplify the Stability and Growth Pact to put more emphasis on debt levels relative to budget deficits.”

“French Governor Francois Villeroy de Galhau also said that Germany among euro-area countries has fiscal room to spend more and could help take some weight off the ECB. Lastly, Austrian Governor Robert Holzmann, said that one of the main tasks of Christine Lagarde will be to restore harmony in the decision-making Governing Council and added “I expect that Lagarde will start a process in the ECB that more strongly integrates national central banks.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.