ECB Vice-President: The Markets Got It Wrong

A “very large majority” of the governing council at the European Central Bank (ECB) voted in favor of the stimulus measures announced Thursday, according to the central bank’s vice president, who has told CNBC that investor expectations had been wrong in the run up to the policy meeting.

“We have to recognize that the markets got it wrong in forming their expectations. They did indeed have higher expectations than were there and that’s why they reacted like they reacted but that was not our intention,” ECB Vice-President, Vitor Constancio told CNBC in Frankfurt.

“After our meeting in October we said that we would reassess the degree of accommodation so we were talking about a recalibration of our measure. We were not talking about, ever, about a new type of QE2 or something like that. That’s not what we were talking about.”

Constancio said that he believed the “fault lies with the markets” after Thursday’s heavy sell-off in equities, and rejected the view that the ECB had lost some credibility over the guidance that it gave before the announcements.

“They (market participants) should have thought in our wording that in October where we said we are going to reassess the degree of accommodation, so it was all the time about recalibration, it is not about a big change in policy,” he added.

“Perhaps many (market participants) were hoping to, you, know, make some money if there would be a big event. But, indeed they got it wrong.”


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.