On Monday we posted “Goldman Says European QE Will Come In 2015 At The Earliest, If At All” in which we showed for the latest time that Europe’s grand delusion that ‘QE is coming” (a rumor originated late last year by none other than a French bank) and all of which has already been fully priced into peripheral bonds and local stocks by now, is nothing but yet another massive bluff by the former Goldmanite and current ECB head who has taken lying about the future to a whole new level. Today Reuters confirms as much when it reports that while the ECB may ease modestly (a step which will achieve nothing to unclog the loan creation pathway to private companies), it will not undertake QE at this point.
Reuters, in an exclusive (apparently the ECB’s favorite mouthpiece is not happy that the WSJ got the market moving scoop yesterday) reports first what the ECB will do:
Five people familiar with the measures being prepared detailed plans involving a potential rate cut, including the ECB’s deposit rate going negative for the first time, along with the targeted measures SME measures. The package offers some stimulus for the euro zone economy but falls short of the large-scale effect the ECB could unleash with a major program of quantitative easing (QE) – money printing to buy assets. Such a QE plan is still some way off.
A June rate cut is “more or less a done deal”, said one of the five sources who spoke to Reuters on condition of anonymity.
A second source echoed that sentiment, and added: “This will be the first major central bank to move to a negative deposit rate. That would move the exchange rate.”
The first two sources spoke to Reuters of a cut of 10-20 basis points, probably in all three ECB rates. The main refinancing rate is currently at 0.25 percent.
Both sources expected the move to bring down the currency exchange rate but said the ECB had made no calculation of how much it was likely to fall by, and had no target for the euro.
