The whining has already begun as the ECB “only” cut rates by 25 basis points, back to a record low of 1% versus “demands” of 50 basis points. The ‘markets’ are used to Bernanke who will only ask how high to jump when the ‘markets’ ask him to. Of course if the ECB was run by the Bernank there would have been a way found around the ‘legalities’ (see 2008) of unlimited bond buying long ago and we’d probably be 10,000 points higher ;). Draghi already has cut rates twice in his very short tenure at ECB head, and now we await the press conference at 8:30 AM EST. Please bring your pacifier in case any of the ‘free market capitalists’ are in the crowd…. the whining for extraordinary intervention is getting overbearing. I believe these folks will eventually get their way – they are just used to nearly immediate gratification by Uncle Ben. “Robust action” is coming in one form or another….
Last week, Mr Draghi hinted at “robust action” in a speech to the European Parliament, but highlighted the need for governments to take the lead, saying that “sequencing matters”.
This has been widely interpreted as a demand for an agreement on government borrowing limits in Brussels on Friday as a precondition for the ECB rescuing Italy.
Analysts expect think this rescue may take the form of a loan from the central bank to the International Monetary Fund.
The IMF would then in turn provide the loans – with tough conditions attached – needed by Rome.