Despite ECB’s Nowotny explaining earlier that “markets are getting more quiet” and that “Brexit has virtually no impact” on his economy, documents seen by Bloomberg show that Mario Draghi is extremely concerned. Warning of years of slowing growth due to Brexit, Draghi stated that if U.K. goes into recession the effects would be immediate on the euro area. Draghi further noted he’s concerned by reactions of countries trying to correct with what they view as wrong exchange rates because this could start competitive devaluations and may increase risk premiums and turbulence. Concluding that the ECB would do everything necessary to ensure price stability, we suspect this fearmongery is nothing but ‘using’ a crisis as excuse to enabling moar QE and utlimately helicopter money.

 

Here is Nowotny earlier playing down the impact of Brexit…

  • *NOWOTNY SAYS BREXIT HAS VIRTUALLY NO IMPACT ON AUSTRIAN ECONOMY
  • *NOWOTNY SAYS EXCHANGE-RATE CHANNEL NOT AS IMPORTANT ANY MORE
  • *NOWOTNY SAYS MARKETS GETTING MORE QUIET, BALANCED

And now Draghi in full panic-monger mode… (via Bloomberg)

  • *DRAGHI SAID TO SEE BREXIT VOTE CUTTING EURO GDP AS MUCH AS 0.5%
  • *DRAGHI SAID TO SEE GDP GROWTH REDUCTION FOR NEXT THREE YEARS
  • *DRAGHI CONCERNED BREXIT WILL LEAD TO COMPETTIVE DEVALUATIONS
  • *DRAGHI SAYS IT’S TIME TO ADDRESS BANK VULNERABILITIES
  • *DRAGHI SAYS `WE CANNOT AFFORD NOT TO’ FIX BANK VULNERABILITIES
  • *DRAGHI SAYS BREXIT RECESSION WOULD AFFECT FX MARKETS

Of course, the panic-mongering is simply the excuse to enable moar QE… and ultimately Helicopter money.

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