Reuters reports the latest comments from the European Central Bank (ECB) Governing Council member and Bank of France Head Villeroy de Galhau, with the key points noted below.
Fiscal policy must be used to help economies.
Global economy looks increasingly uncertain.
I supported many elements of new stimulus package, including state-dependent forward guidance and introduction of tiering.
Was not in favor of the resumption of net asset purchases at this time.
Opposes QE, cites ECB bond buying is not needed right now.
I thought further purchases are unnecessary right now given very low levels of long-term interest rates and term premia.
Premia had already been successfully compressed.
Significant strengthening of forward guidance, the consequent of longer reinvestment period and the DFR cut, are already powerful.
Our forward guidance is now strongly “state based”, reflecting our enhanced commitment to reach our objective.
This is significant progress that has perhaps been overshadowed by the arguments over QE.
EUR/USD is making an attempt to regain the 1.10 handle ahead of the German IFO Survey. But the risks remain skewed to the downside amid Euro area manufacturing recession.
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