If the law was the ultimate arbiter, the European Central Bank would have the most verdant of green lights for an unlimited bond-buying programme with new money. In reality, politics and German concerns will dictate.
Markets are beginning to ponder just how definitive the European Central Bank may be next week in launching quantitative easing. One reason is today’s ruling at the European Court of Justice.
German inflation figures for December will presage the euro zone number on Wednesday, together offering one of the final pieces of the jigsaw for the European Central Bank before its late January policy meeting at which it could commence a quantitative easing government bond-buying programme.
The last day of the year and all is quiet – but not for long.
Unless the price of oil bounces markedly or Vladimir Putin walks away from Ukraine thereby loosening western sanctions – both unlikely – Russia could be heading for a serious economic fall. Reserves are being burned defending the currency. They are sufficient for now but without hefty tax increases, public spending cuts and/or a higher pension age the outlook for 2016 and beyond is much gloomier.
European Central Bank President Mario Draghi pushed the envelope as far as he could last week, saying a review early next year would decide whether money-printing to buy government bonds was needed. He said he didn’t need unanimity within the ECB to force it through.