Ex ECB Member Forecasts Action Soon

Lorenzo Bini Smaghi, an ex-member of the ECB executive board, forecast easing was coming, and said the delay was due to attempts by Draghi to build unanimity for action among the Governing Council’s 24 members.

“I think he is gaining time for the argument to be won within the council,” Bini Smaghi told CNBC on Friday, from the Ambrosetti Forum in Italy.

“The ECB is a bit different as a central bank; it needs to create a consensus, because a move by the ECB with a consensus is more credible than a move with a divided council. I think he needs the decision to mature within the Governing Council.”

Despite the inaction, Draghi emphasized in his news conference on Thursday that the ECB could act swiftly to instigate “unconventional” policy measures if necessary. He also flagged that both quantitative easing and negative deposit rates had been discussed at this week’s meeting.

Bini Smaghi predicted that easing would materialize in “a couple of months”.

“I think he is preparing the markets to understand that action will take place,” Bini Smaghi said.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza