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By and large the pressure being put on the ECB to cut is coming from external sources such as politicians, the financial markets, banks, etc. While it may look like there is a lot of pressure on them in the media the ECB is not answerable to any of these people. The markets, in screaming for these rate cuts, are showing that they are fearful for future prospects.Obviously the ecb seems under pressure to cut rates given what happened during the week.
But why?
If they cut due to pressure being put on them then yes it will mean their mandate is a joke. The repercussions if they bend to the pressure would mean they lose all credibility which would be very damaging for such a recent and largely untested currency.So - is this mandate just a joke in practice or what?
like - if u went by the book then obviously the ecb would be under zero pressure to cut rates - if anything they should be increasing.
Don't confuse the Fed with the ECB. The latter have no precedent of doing what you describe... yet anyway. The next few months will reveal how credible they really are.Are the ECB really just rubber stampers to the markets whims anyway. Eventually they do what the market wants and the market wants a rate cut.
Don't confuse the Fed with the ECB. The latter have no precedent of doing what you describe... yet anyway. The next few months will reveal how credible they really are.
Don't confuse the Fed with the ECB. The latter have no precedent of doing what you describe... yet anyway. The next few months will reveal how credible they really are.
they will of course follow the US. a call from mr bernanke and its a done deal
they will of course follow the US. a call from mr bernanke and its a done deal
always = 8 years"Helicopter" Ben doesn't need to call them at all. If the Fed drops the rate enough the ECB will follow suit at some stage. It would be a break from observed rate patterns if the ECB left rates unchanged (or hiked them) while the Fed is lowering them. The ECB have always followed the same direction of the Fed's rate after a period.
always = 8 years
You'll forgive me if I say that that is too short a time period to be so definitive.
'always' is quite a definitive term.Didn't say it was definitive, just on past perfomance (over the last 8 years) the ECB has always followed the Fed's rate direction (be that up or down). I don't think it will be any different this time and it'll depend on how far the south the Fed are going with their current rate cuts. Maybe it'll be different this time?
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