Thursday’s meeting is too early for the ECB to get in an activist mood again, BAML says
Going back to the drawing board immediately after having delivered another
layer of accommodation – even if it was received as insufficient by the market –
is not going to be an appealing option for the ECB. True, one could return
Draghi’s comments straight to him: if a central bank’s credibility must be
judged by its capacity to deliver on its mandate, here price stability, and not
on its willingness to stick to a particular stance or instrument – the point he
used to justify the U-turn on the deposit rate – then there is no reason why the
Governing Council should request a "decency delay" before acting again if the
situation requires it. Still, institutions have their pride, and we
suspect that a prejudice to see the December package as sufficient for some time
will inform the Governing Council’s approach to the news-flow.
