Daily Archives: November 10, 2011

Claire Jones

Nicolas Sarkozy will be pleased. Lorenzo Bini Smaghi is to quit the ECB for Harvard at the end of this year.

Below is the ECB’s statement: Read more

Claire Jones

When the European Central Bank said in August that it would buy Italian and Spanish government debt, some feared that the central bank would struggle to “sterilise” the purchases.

The ECB does not want its purchases to boost inflation, so each week it takes an amount of money from the system, roughly equivalent to the value of the bonds it has bought, a technique known as sterilisation. It encourages banks to deposit money with them by offering to pay a competitive rate of interest.

Any signs that such a struggle was on the cards, and we would have seen a rise in this rate of interest.   In fact the opposite has happened; it has dropped.

That should allay any concerns that the ECB will struggle to remove the cash.

But – with Mark Carney, the governor of the Bank of Canada, warning of a “severe retreat” in global liquidity – should the ECB be sterilising its purchases in the first place?  Read more

Claire Jones

The Monetary Policy Committee held bank rate at 0.5 per cent and the size of the asset purchase programme at £275bn, as expected.

The Bank of England holds its inflation report press conference next Wednesday, when the governor will present its latest forecasts for growth and inflation.