He comments that his first press conference saw him downgrade his economic assessment long before new forecasts were published and within a month he was adopting radical new policies to help tackle the sovereign debt crisis. The ECB looked less like the Bundesbank and more like the Federal Reserve. But with the crisis in abeyance this year, ECB policy has diverged from that of the Fed, BOJ and MPC.
He writes, “There is no talk of easy policy for an extended period and even less of helping the economy reach ‘escape velocity’. Instead, it is all about inflation. With more focus on inflation, less willingness to maintain super-easy policy even in the face of normalisation in the financial system, the ECB has the ‘least easy’ of the monetary policies of the biggest central banks, and the strongest currency as a consequence – despite Europe’s economic weakness.”