-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI PodcastsFixed IncomeFI Markets AnalysisCentral Bank PreviewsFI PiFixed Income Technical AnalysisUS$ Credit Supply PipelineGilt Week AheadGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance CalendarsEZ/UK Bond Auction CalendarEZ/UK T-bill Auction CalendarUS Treasury Auction CalendarPolitical RiskMNI Political Risk AnalysisMNI Political Risk - US Daily BriefMNI Political Risk - The week AheadElection Previews -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
Commodities
Real-time insight of oil & gas markets
-
Credit
Credit
Real time insight of credit markets
-
Data
-
Global Macro
Global Macro
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
Global MacroDM Central Bank PreviewsDM Central Bank ReviewsEM Central Bank PreviewsEM Central Bank ReviewsBalance Sheet AnalysisData AnalysisEurozone DataUK DataUS DataAPAC DataInflation InsightEmployment InsightGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance Calendars EZ/UK Bond Auction Calendar EZ/UK T-bill Auction Calendar US Treasury Auction Calendar Chart Packs -
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessMNI EXCLUSIVE INTERVIEW: ECB Smets Favours Extended QE Taper
By Jack Duffy
BRUSSELS (MNI) - In current market conditions it may make sense for the
European Central Bank to lower the pace of its asset purchases but to extend the
program for a relatively longer period, Governing Council member Jan Smets told
Market News International in an exclusive interview.
"I agree with this assessment in a context where market conditions have
largely normalized," said Smets, who heads the Belgian central bank.
"When there is more uncertainty, you would probably see more merits from a
higher purchase pace. Given that we still need more confidence on inflation, I
think a certain duration would be an interesting feature," he added.
Smets said there was "broad agreement" at the September policy meeting to
take the bulk of the decisions regarding the recalibration of the asset purchase
program and other policy instruments at the Oct. 26 meeting.
A key debate at the meeting is expected to be the pace of asset purchases
versus the duration of the program, with some council members arguing for a
fixed tapering schedule and others a more flexible, extended approach. Many
analysts see the pace of purchases being reduced to E40 billion per month in
January from E60 billion currently.
Smets said he expected any recalibration of be "gradual and cautious" but
that neither an expected weakening in the pace of headline inflation in the
months ahead or the continued relative strength against the euro would likely
prompt a monetary policy response.
"The expected temporary drop in headline inflation is mostly due to base
effects from past energy price inflation. Monetary policy should not react to
that and you could apply a look-through approach," he said.
Eurozone inflation was a weaker-than-expected 1.5% in September and ECB
staff have warned that it could fall below 1.0% in the first quarter of next
year due to year-on-year changes in prices for crude oil and unprocessed food.
He also acknowledged that the QE bond buying program could face constraints
next year from the 33% issuer limit and the lack of bonds available to buy in
certain markets, but he said he was confident that the entire monetary policy
package could be adjusted and still deliver the stimulus needed to support
inflation. He confirmed that there has been no discussion about changing any of
the parameters of the QE program.
"We have to include these constraints in our recalibration," he said. "But
these are constraints only to the asset purchase program not to the efficiency
of our overall policy package."
Smets said the recalibration was coming "in a context where the economy is
behaving better and where we should see a further closing of the output gap and
a rise in inflation. But our latest assessment was clear that inflation still
needs to be supported by monetary policy."
On the euro, which is down from its recent peak of around $1.21 but still
up 12% against the dollar this year, Smets said he saw no cause for concern.
"I think you should not be worried to the extent that the appreciation is
simply reflecting the better shape of your economy," he said. "It's a natural
thing. And then the better economic conditions may largely compensate the impact
of that appreciation."
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: M$X$$$,MT$$$$,MX$$$$,M$$EC$]
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.