Here we go again with ECB "sources" stories
That Bloomberg is touting an ECB "person familiar with the matter" headline once again should be cause for some concern, given what happened last year with that taper story that I happily sold into.
This time it might be different as Draghi was posed that very question on raising before the end of QE yesterday, and gave less than a definitive answer.
His answer was that "I won't speculate on rate hikes before QE ends", a comment I noted as "not a no then?".
So this time Bloomberg might be smelling some real smoke surrounding this, and if they are, it's not a surprise given how the ECB changed, and were looking to further change, their language.
The only way the ECB would hike before the end of QE is if the inflation kept on rocking higher and de-anchored inflation expectations, and we all know that the measure to monitor that is in the core number, which is doing nothing right now.
The euro may have jumped on the story but again, it's not a game changer. As I wrote in my Draghi review, The words have changed but the tune remains the same.
Update: I'm going to throw a littles caveat into this as reader Prutar raises a great point. What could be the definition of a hike? Starting to bring the deposit rate back towards zero before the end of QE is something that the ECB could effectively do that wouldn't really be classed as a hike, in normal terms. They cut it during QE and so raising it back would be a natural progression as they head towards the current QE end date.
