The bombardment of European Central Bank interventions continues today. ECB chief Mario Draghi addresses the European Banking Congress in Frankfurt and any number of his colleagues break cover elsewhere.
Draghi shepherded a surprise interest rate cut earlier this month and consistently says that other options are on the table though yesterday he said that talk of cutting the deposit rate into negative territory to try and force banks to lend more was people “creating their own dreams”.
Having said that, the prospect of printing money has been raised, at least in principle, and the markets still expect a new round of long-term liquidity pumped into the banking system – a repeat of last year’s LTROs – early next year. Anything more would be hugely difficult for Germany and its fellow travellers to swallow.
German Finance Minister Wolfgang Schaeuble talks at the same conference and staked out his ground yesterday, saying the ECB must not offer “false stimulus” and that monetary policy alone would not solve the euro zone crisis – a fairly clear warning off thoughts of QE.
Bundesbank boss Jens Weidmann was one of around a quarter of the ECB’s policymaking ranks to speak out against the November rate cut and has also constantly stressed the limits of monetary policy.