ECB chief economist speaking to La Repubblica. Livesquawk reporting.
- ECB hasn't run out of anti-inflation ammunition
Was he surprised by the reaction of equity markets on Thursday fell instead of rising?
"I
thought there would have been some bumps in the short end of the yield
curve, but that the reaction of the other markets would be driven from
the rest of the package. In the end what we got it makes sense: there
was an improvement in market conditions of credit, which it is positive
given that the situation was getting worse. "
The market is right to think that there will be no more rate cuts?
"We have made it clear that rates will remain" low, or lower "for an extended period."
So you have not reached the lower limit for the deposit rate?
"No.
As shown by the other central banks, we have not reached the lower
limit. If new negative shocks worsen the economic scenario, a rate cut
remains among our weapons."
You have also decided to buy corporate bonds: will acquire even titles like Volkswagen?
"Yes,
we will buy the securities of companies that have a of" investment
rating level. "It is true, we expose ourselves directly. But we do not
want to influence the relative prices between titles. If the price of
some bonds will rise, investors will buy bonds which they are not in our
portfolio. So the effect of our purchases will spread and the market
will continue to operate. "
Not a million miles away from what Draghi said in real terms. Draghi said they shouldn't need to cut further if conditions don't worsen and Praet's just saying the option is there if needed.
EURUSD a tad lower on general USD demand.
Full (translated) article here