Not much impact of ECB's move to keep rates unchanged: Rabobank

By keeping rates unchanged, the European Central Bank seems to have conveyed that it is currently focusing on implementation of the steps taken so far and market watchers need to exhibit patience, feels Jan Lambregts, Global Head Of Financial Markets Research, Rabobank

Lambregts believes the recent quantitative easing by various central banks will lead to a flood of liquidity into the market which will eventually find its way to equities and will prove beneficial for emerging markets including India.Below is the verbatim transcript of Jan Lambregts’ interview with CNBC-TV18's Surabhi Upadhyay.Q: So we haven’t got any fresh triggers from the European Central Bank (ECB) what does means for risk assets the fact that markets have got in a bit of limbo over the past two or three sessions digesting earnings.A: Yeah, we have indeed in a little bit of limbo situation. It doesn’t mean an awful lot at the moment. The ECB’s message was really about listen we have taken such drastic steps last time around, we are still in the process of implementing that. This is all coming through in June. Our teal throws and reincarnated form will be coming through and top of that we will be starting to buy corporate bonds the details of which will be on our website after this press conference as what they said. That’s where they focussed on the rest of the story was more about uncertainties, about the tough situation they still in, about the ECB is trying to live up to its mandate and pushing back to policymakers who having criticising them for example a few German politician of course saying the ECB is overstepping its bounds. The ECB is bringing up a vigorous case using all of its staff to explain to complex models that counterfactual would have been my tourist, what can you say to that. Of course, they have been successful and the pushing back of policymaker saying this would all be much easier if you were doing your structural reforms, so vigorous defence at the same time saying please be patient here we are still in the process of implementing unprecedented measures still come true in June.Q: Monetary policy continues to be ultra loose in most parts of the world and people have been using some of the money to put it back towards emerging markets (EM) India has been a big beneficiary of that as well over the last few weeks. Do you think that’s going to continue?A: Well certainly, we know the model now when things don’t work with central banks they simply do more of it and we liken it almost to a policy that is akin to drinking to avoid a hangover. When it’s not working when the medicine doesn’t seem to be working sufficiently enough they simply bring more quantitative easing (QE) to bear. If you look at the balance sheets of the major central banks ranging from People\\'s Bank of China (PBOC), to the Federal Reserve System (Federal Reserve), to the European Central Bank (ECB), the Bank of Japan (BOJ), the Bank of England, the similar tone is out there. Most of them if not all of them have increases in the size of their balance sheets and are expected to increase further in the upcoming years. That means the total amount of liquidity squashing around the system and finding it ways to the equity market is also increasing. Of course within that you can always have a portfolio approach for one asset class is favoured over another where one region is favoured over another. But I suspect that as we see a little bit of relative calm coming into some of the emerging markets that India lead stands to benefit from some of that ample liquidity that still flushes around.