Very interesting action last night as markets grappled with huge central bank cross-currents including ECB disappointment, FOMC confusion and BOJ trepidation. The ECB held off, from the FT:
This week’s meeting of the European Central Bank’s governing council was notable not so much for what the ECB did not do, as for what it did not say. The decision to keep monetary policy on hold for now is reasonable, given largely unchanged economic projections and a run of data suggesting eurozone growth remained solid over the summer. However, Mario Draghi’s inability to expand on what action the ECB will take if further stimulus is needed in coming months is worrying.The ECB shares the quandary faced by all the major central banks: how to find fresh sources of stimulus when they have already pushed monetary policy deep into uncharted territory. Its policy of negative interest rates is proving effective, but it is fiercely opposed by banks whose profits it threatens. More radical options such as helicopter money are not on the table.
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