Political pressure on the ECB escalated - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, suggests that the political pressure on the ECB has stepped up a few notches after German Finance Minister Schauble blamed ECB policies for a rise in support for Germany’s rightwing Alternative for Germany Party.

Key Quotes

“The bad news for the ECB did not end there. In reference to the use of extraordinary monetary policy instruments, ECB Executive Board member Yves Mersch has dared to suggest that “one may consider that as the usage of these instruments is expanded to very high proportions, they may start to display diminishing returns at some point”. It is not the content of this statement that is a surprise but the fact that a key central banker has publically accepted that central banks could be running out of ammunition in the fight against disinflation and lackluster growth.”