The monetary policy divergence play is likely to become clearer for Draghi after Yellen speaks this week, noted Marcus Ashworth, Chief Market Strategist for Haitong Securities, when he joined Nick Batsford and Marc Ostwald on the Tip TV Finance Show.
Yellen to clarify on a Fed rate hike, ECB to create policy divergence
Ashworth expected that we should get a definitive answer from Yellen on a rate hike this week, and this will free up Draghi who needs the Federal Reserve to hike in order to create policy divergence. He continued that the ECB have the option to increase, extend and widen the range of QE, as well as the possibility of a 2 tier deposit rate.
Watch the video to see how the Fed and ECB plan to make life difficult for banks, plus views on Wall Street and the US reverse repo mechanism.
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