Tuesday, 4 September 2012

The Bundesbank Doctrine. The End.

The ECB meets on Thursday, it will discuss the details of its new bond purchasing programme. For some, the new plan marks the final end of the Bundesbank doctrine; for others, it is a necessary evil to calm the crisis. It is obvious to us that Mario Draghi’s congeniality and some vague words alone will not have the same calming effect as in August. In our view, the ECB might eventually present targets for short-term bond yields linked to the refi rate.

However, not all the detail might be revealed this week, perhaps because there is not yet full agreement within the Governing Council, but maybe also to keep pressure on peripheral governments.


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