- ABS is one of many options
- Sceptical about negative deposit rate, doubts banks will give more loans on neg rates
- 10 basis points doesn’t make much of a difference
- Nothing has been decided on measures
- Sees credit crunch in loans to SME’s
- Have very low inflation rate in Europe but doesn’t see deflationary perspective
Austria CB head and ECB board member Ewald Nowotny is losing his touch. He was one of the first to spark negative rate talk last year and it had a marked effect on the Euro. He must be losing his touch as he’s been on the wires all day but the market is ignoring him.
The ECB are looking at QE but whether that comes as buying asset backed securities or another round of LTRO’s is still in discussion, if indeed they do anything at all. He makes a very valid point about the size of any cut though. With rates this low any marginal cut, even to the deposit rate is piecemeal and may give the market the impression that the ECB is running out of rope.