The ECB is right to hold back on guidance. Given the mixed data flow on growth, it cannot be confident that a series of rate hikes back to neutral is feasible at this stage in the way that the Federal Reserve was when it started to raise rates.
More Quotes from Michael Hume:
The data flow has been pretty mixed over the past three weeks, with survey data fairly robust, but most of the hard data -- German retail sales, employment, consumption -- turning out on the softer side, which casts some doubt on how strong the recovery iMichael Hume
U.K. economists were nearly unanimous in predicting the decision to hold rates in the wake of recent upbeat data on manufacturing output and retail sales. They cut last month and there are signs that the domestic economy has been picking up speed, ... Their only worry is that the pound will remain strong (against the euro)
Michael Hume
The risk of a (U.K.) rate cut has risen sharply with this vote. It shows the doves are fighting pretty hard but there is a middle camp which is ready to be persuaded.
Michael Hume
They may want to cut rates as insurance against meeting the inflation target.
Michael Hume
I don't think they'll want to suggest March is a done deal, but I think at the same time they'll probably want to give indications that rates remain incredibly low, and that survey data continue to point to a robust first half of the year. So I think you can expect to see some firming up of the language.
Michael Hume
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