ECB: back to the future!

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European Central Bank may resume asset purchase program In December, financial markets said goodbye to European QE. The €2.6 trillion program, which began in early 2015, generated mixed feelings throughout its entire period of operation. From euphoria in 2017, when the eurozone economy was expanding at the fastest speed in a decade, due to large-scale monetary stimulus, to frustration. When asset purchases stopped, the European GDP growth rate was the lowest in four years. Many felt that the ECB, like a heavy drinker, will not get rid of the addiction. I'm quitting drinking! One more time! He hasn't done it completely... LiteFinance: Politicians need support from central banks |  Litefinance If the treatment doesn't work, what's the point? Unlike US QE that saved the US from recession, the European quantitative easing program has brought the eurozone economy back to square one. GDP is expanding at the same rate as in 2014. Could it be, the issue is quantity? Tell me please, how much hawthorn should I take to become a hawk? The case with the Bank of Japan shows that huge scales do not work.

The Japanese inflation rate remains stationary, completely ignoring cheap money. Of course, in fact, this is not the case. LiteFinance: Politicians need support from central banks |  Litefinance +0.2% q/q in 2018 and in 2014 means Paraguay Mobile Number List completely different things. In 2013, Europe was recovering from the debt crisis and, amid the low base effect, modest growth suggested weakness. In 2017, the base was high, so they shouldn't cry over spilled milk. In response to criticism of the useless program, Mario Draghi argued that it created several million jobs. And that is a great result. The economy has been so addicted to QE that it may soon claim, "there is so much money in the world, and people don't know what to give away." You know, this could be tomorrow. LiteFinance: Politicians need support from central banks |  Litefinance The ECB has no means to handle a possible recession. The interest rate is the lowest possible, so in the event of a crisis, they will have to come back. To the future. Resume the asset purchase program.



They may have to do it next year. In this sense, the early retirement of Mario Draghi will allow the president of the ECB to save his face. Abandoning his work, he will do everything possible not to run. After all, who has an easy life now? The Fed has another problem. The central bank puts active pressure on the president of the United States. Jerome Powell just remains silent. If you start answering, you will get into trouble: - Why are you informing me all the time? - I can sing. The intervention of politicians in the activities of central banks has become a calling card of the outgoing year. Along with Donald Trump, Turkish President Recep Erdogan gave his advice to the local regulator. And the head of the Reserve Bank of India did not retire of his own volition: - The spirit of the adventurer died in you! - But the instinct of self-preservation is alive. Central banks never tire of pointing out that they do not interfere in politics, the problem is that politicians need them. They demand the need to keep interest rates low, call banks crazy, hint at fines if monetary policy is tightened. In this sense, the Fed with its December rate hike resembles a kitten. A guilty kitten who was punished and made the same prank again.