Ahead of the ECB meet on Thursday, Jurgen Michels of Citi feels chances of ECB action is very little taking into consideration the stands taken by the German Federal Bank, Bundesbank and Spain's reluctance to ask for support from the EFSF.
Ahead of the ECB meet on Thursday, Jurgen Michels of Citi feels chances of ECB action is very little taking into consideration the stands taken by the German Federal Bank, Bundesbank and Spain's reluctance to ask for support from the European Financial Stability Facility (EFSF).
Michels believes, for a third round of quantitative easing, the economy has to go through more weakness. Hence, in a situation like this, there is hardly any hope for a decisive action from the ECB this week, he tells CNBC-TV18.
Here is the edited transcript of the interview on CNBC-TV18.
A: The big move in the market after statements from Mr. Draghi last week that the ECB would do everything to preserve the euro and we had also suggested that the ECB is also willing to go ahead with purchases in the markets. We have seen more news from European leaders including Ms Merkel, Mr. Monti, Mr. Hollande and others said, we are prepared to do everything.
I think regarding the ECB, the comments of Mr. Draghi nevertheless were not very well coordinated with the rest. We have seen criticism from the Bundesbank, particularly regarding those measures. I think it depends pretty much on the question, if this bond purchase would come along and in that respect it's very important to see that Spain asks for support from the EFSF through relied programme.
If that does not come, the chance of ECB action is rather small. In that respect, the ECB might disappoint on Thursday because we have not seen any signs from Spain to ask for support. Yesterday again Spanish officials highlighted that they do not think about asking the EFSF to support the summon.
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