The Germans have lost control of the ECB, writes Ambrose Evans-Pritchard, citing the "astonishing" interview governing council member Peter Praet gave to the WSJ yesterday. The chat opened the door to Fed-style QE to put an end to the deflation in southern Europe.
""That is a radical change of position for the ECB and a very welcome one in our view," says BNP Paribas' Ken Wattret. "The patience of the majority of Council members towards the ‘blocking minority,' which has led to a worryingly slow policy response to persistent below-objective inflation to date, has been exhausted. The plunge in inflation in October has been the trigger."
The Germans aren't pleased, with the IFO's Hans Sinn blasting the ECB for cutting rates last week, domestic tabloids screaming about the destruction coming to German savings from an Italian-controlled central bank, and the Bundesbank's Andreas Dombret worrying today about the risks to financial stability from near-zero rates.
Is it "look out below" for the euro (FXE), which is a couple of cents off recent highs, but well above its level of one year ago?