The European Central Bank (ECB) should stop talking about fiscal policy as it feeds the perception that the bank is running out of ammo, according to Robin Brooks, Chief Economist at the Institute of International Finance (IIF).
The 17-nation central bank should focus on the core issue of interest rate differentials and its impact on the EUR exchange rate.
“Eurozone interest rates haven’t fallen as much as US rates (blue). That’s putting appreciation pressure on the Euro, which is threatening Eurozone reflation,” Brooks tweeted on Sunday.
EUR/USD is currently trading at 1.1969, the highest level since Sept. 1.
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