• This week we have the happy coincidence of the central bank chiefs of Belgium and the Netherlands giving detailed commentaries on ECB monetary policy. In the days of yore – under former President Draghi – it would be an easy call. Ignore the hawks and go with the doves and centrist. We would complete tune out the ramblings of Bundesbank chief Jens Weidmann or his Dutch henchman, Klaas Knot. We fondly remember former Belgian central bank chief Luc Coene dismissing the hawks resistance to President Draghi launching QE as a “theological discussion.” Whether or not the central bank should go buy government bonds – this was in late 2014 when President Draghi had just survived a putsch – had become “a matter of faith.”
  • But nowadays the roles are reversed. Ignore the doves and go with the hawks and centrists. The ECB is on track to undershoot its purchase commitment for the pandemic QE program. In fact, back in January the ECB even formalized that it would buy less bonds than advertised if possible. But the doves are nowhere to be found. They haven’t put up any resistance to the ECB carefully scaling back its purchase plans. Meanwhile, centrist and doves are both looking for the first opportunity to dial down bond purchases. Of course: the sooner the better as far as the hawks are concerned.


For the full report, click here