4 Sep 2013
Flash: ECB/BoE not likely to stall rates – TD Securities
FXstreet.com (Lisbon) - There is no question that central banks in Europe this week could stall the moves in rates markets if they wanted to, however we don’t think they will, notes the TD Securities Team.
Key quotes
The dilemma for central banks like the ECB and BoE is that they devised and implemented forward guidance in an environment of expecting subpar growth and foreign influences like tapering of driving their yields to “unwarranted” levels.
“Central bankers also know that they would quickly succumb to the boy who cried wolf syndrome if they tried to talk down the market every day it pushed rates a few basis points higher. And lastly, it is a delicate balancing act to tell markets that the polices needed to restore growth are in place.”
Key quotes
The dilemma for central banks like the ECB and BoE is that they devised and implemented forward guidance in an environment of expecting subpar growth and foreign influences like tapering of driving their yields to “unwarranted” levels.
“Central bankers also know that they would quickly succumb to the boy who cried wolf syndrome if they tried to talk down the market every day it pushed rates a few basis points higher. And lastly, it is a delicate balancing act to tell markets that the polices needed to restore growth are in place.”