Derek Halpenny, European Head of GMR at MUFG, notes that the growing criticism of central bank monetary policy with the latest sign of this an article written in yesterday’s Telegraph by William Hague accusing central banks of having “lost the plot”.
“The article followed the criticism by PM Theresa May about the negative impact of QE on savers and pensioners. We would argue that surely the best way for governments to contribute to the ending of QE would be to act more aggressively in implementing growth boosting policies. That is what central banks have been calling for at the G20 level. First up on the central bank side to respond to this growing criticism will be ECB President Draghi on Thursday who will no doubt be asked to comment. Expect a very strong rebuttal from the central banker who has grown perhaps most frustrated with government inaction, especially by Germany on the fiscal side. We would also expect a strong argument against inflation target overshooting which could provide some near-term support for the euro later this week.”