Discord reported between Eurozone central bankers, Eurozone growth forecast cut | Euro rises on QE doubts

Yesterday the European Commission cut its estimate for the growth of the Eurozone. This year it will only measure 0.8%, as against the 1.2% estimate from earlier. Growth forecast for 2015 has been cut to 1.1%, from 1.7%.

The Commission cited low inflation and high unemployment as contributing to the difficulties. France and Italy were given particular mention in this regard.

Separately, a report from Reuters has highlighted the discord that exists between the ECB and the German central bank, the Bundesbank. Apparently this centres on the tendency of the ECB president, Mario Draghi, to go ahead with independent actions or to make announcements based on the majority outlook of the other members of the ECB governing council. This might work in the USA, but in Europe the members would prefer consensus.

Personal relations between Draghi and the head of the Bundesbank, Jens Weidmann, are also said to be difficult. Our EU correspondent tells us that on those occasions when they are obliged to attend the same function they tend to be found on opposite sides of the room most of the time, by mutual agreement.

Euro rises on QE doubts

The market, for now at least, seems to be putting more store in the Reuter’s article than in the news about the lowering of growth forecasts. The Euro got a significant lift against most of its counterparts on the expectation that the discord between the ECB and the Germans will result in either a delay in the introduction of measures to boost inflation, or their total abandonment. 

The ECB monetary policy statement and press conference tomorrow (Thursday) promises to be as interesting as ever.