ECB Leaves Rates Unchanged, Draghi Bores To Death, The Market Doesn’t Care

Posted by on January 19, 2017 1:27 pm
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Here is the full statement from the ECB….

Monetary policy decisions

19 January 2017

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

Regarding non-standard monetary policy measures, the Governing Council confirms that it will continue to make purchases under the asset purchase programme (APP) at the current monthly pace of €80 billion until the end of March 2017 and that, from April 2017, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

In other words, Draghi continues to play with his Bazooka, while utterly confusing where we are in today’s business cycle. We are not in recovery or expansion, we are at the end of a massive financial bubble.  Further financial stimulus will not be helpful at this stage. If anything, it will be detrimental. Once that becomes apparent to the rest of the market, no stimulus will help.

Draghi Speech: Watch Live

Market Futures: Flat