Bill Fleckenstein, founder and president of Fleckenstein Capital, thinks it will be a very big problem if the ECB does not act soon.
Yesterday, the ECB chose not to act, as it left rates unchanged. Fleckenstein commented on the ECB on Financial Sense.
Though Draghi did say that he was ready to act, I would have expected markets to react rather negatively to the inaction today, but that was not the case. Perhaps that indicates that there is manoeuvring behind the scenes for more ECB easing. If they don’t do something soon it will not only be a big problem, it will mean the ECB is the odd man out, as most likely the Bank of England is ready to act, along with the Fed.
If the ECB continues the wait and see approach, Fleckenstein thinks the Bank of England and the Fed will act, leaving the ECB in the dust.
Today however, the Bank of England chose not to expand its asset-purchase program and we will hear more of the Fed’s stance when Fed chairman Ben Bernanke testifies before the Joint Economic Committee.