ECB's Not Quite Ready to Risk a QE Taper Tantrum

The transcript discusses the European Central Bank's (ECB) challenges in managing inflation expectations and its quantitative easing (QE) exit strategy. It highlights the differing views within the ECB, the political pressures from upcoming elections, and the market's interpretation of potential tapering. The ECB's approach to asset purchases and Mario Draghi's communication strategy are also examined, emphasizing the need for careful messaging to avoid market misinterpretation.

What is the main reason some market participants believe tapering is imminent?

• The ECB has run out of bonds to buy.

• Inflation targets have been met across the Eurozone.

• There have been leaks suggesting an exit strategy for QE.

• The ECB has announced a specific date for tapering.

How does the upcoming German election potentially affect the ECB's policies?

• It will result in immediate tapering of asset purchases.

• It may lead to a complete halt of the QE program.

• It could increase political pressure on the ECB.

• It will have no impact on ECB's decisions.

What is the concern of German citizens regarding ECB's inflation policy?

• It aligns perfectly with their traditional views on inflation.

• It has no impact on Germany's economy.

• It conflicts with their long-standing inflation traditions.

• It has led to hyperinflation in Germany.

What operational change might the ECB consider to continue its QE program?

• Increasing the issue limits for bond purchases.

• Switching to purchasing stocks instead of bonds.

• Reducing the number of bonds it purchases.

• Halting all asset purchases immediately.

Why does President Mario Draghi avoid discussing tapering publicly?

• He has already announced a tapering plan.

• He is waiting for the next Governing Council meeting.

• He wants to prevent misinterpretation of ECB's intentions.

• He believes tapering is not necessary at this time.