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2 Dec 2014
ECB: What’s that greasy substance? - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank explained that under ‘normal’ circumstances, central banks are well advised not to react to oil price swings.
Key Quotes:
“Unless they see significant risks of second round effects on core inflation to either side. But in the ‘new normal’ nothing really is what it seems”.
“The direct reason for declining oil price is of course last week’s decision by OPEC not to cut its production, but the underlying cause is a much more mixed set of factors, stemming both from the supply as well as the demand side”.
“Oil prices are falling because global demand is slowing down”.
“The ECB is being pushed ever closer to announcing full-blown QE”.
“First of all the currency no longer seems to provide any offset to the decline in commodity prices”.
“Secondly, the low level of capacity utilization implies that second-round effects on wages cannot be ruled out. In the context of very low inflation to start with, this is certainly unwelcome”.
“We argue that the December meeting is (still) too soon for QE announcement”.
“President Draghi will have to build his case and get as many GC members on board as possible”.
“There are at least a couple of them that are willing to wait a few more months but who would flip sides if really being pressed for it”.
“We would like to recall that it was only in November that the Governing Council formally requested ECB staff to plan for contingencies”.
Key Quotes:
“Unless they see significant risks of second round effects on core inflation to either side. But in the ‘new normal’ nothing really is what it seems”.
“The direct reason for declining oil price is of course last week’s decision by OPEC not to cut its production, but the underlying cause is a much more mixed set of factors, stemming both from the supply as well as the demand side”.
“Oil prices are falling because global demand is slowing down”.
“The ECB is being pushed ever closer to announcing full-blown QE”.
“First of all the currency no longer seems to provide any offset to the decline in commodity prices”.
“Secondly, the low level of capacity utilization implies that second-round effects on wages cannot be ruled out. In the context of very low inflation to start with, this is certainly unwelcome”.
“We argue that the December meeting is (still) too soon for QE announcement”.
“President Draghi will have to build his case and get as many GC members on board as possible”.
“There are at least a couple of them that are willing to wait a few more months but who would flip sides if really being pressed for it”.
“We would like to recall that it was only in November that the Governing Council formally requested ECB staff to plan for contingencies”.