He quotes him as saying ““the weak overall economic situation, combined with slow money growth, means that the risks of inflation are currently very low over the medium term. Our interventions will not change this outlook”.
Hardman feels that these comments specifically on the inflation outlooks have encouraged speculation that the ECB may signal today that it is more willing to ease monetary policy further. However, he feels that it is worth noting that the speech was made to a German audience and designed to damped concerns that OMT purchases will fuel upside inflation risks and as such he deliberately talked down inflation risks.
On a more positive note for the Euro, the Greek parliament approved the additional austerity bill required to appease external creditors. Eurozone Finance Ministers will discuss in more detail the release of the next tranche of aid to Greece next week and measures to ease the debt burden.
Hardman shifts focus to the BoE meeting today where he notes that the bank is expected to pause its QE scheme. He feels that a pause may give the pound a brief lift today although its negative impact over the past few years has been low with direction driven by external factors.