Despite ECB President Mario Draghi’s assurance last week that the Bank “stands ready to act”, he gave very little indication of what support it might offer. An imminent interest rate cut is possible, but we do not see it as a done deal and fear that it could do more harm than good anyway. As for unconventional measures, the ECB seems focused on providing finance to SMEs, which might provide moderate support to the economy. But it still seems to consider bolder policies such as the unconditional and outright purchase of government debt to be well outside its mandate. The Bank therefore seems to be lagging further and further behind its peers elsewhere.
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