There's One Ironic Reason To Think The ECB's New Actions Just Might Work

Mario draghi waterAP ImagesMario Draghi

This week, ECB chief Mario Draghi unveiled a slew of new measures designed to boost the Eurozone economy and prevent deflation.

In addition to cutting interest rates, Draghi also committed to buying assets, in a strategy that some might liken to Quantitative Easing (though he’s not buying government bonds).

Naturally, there’s a lot of scepticism about whether the measures can really revive the ailing Eurozone economies.

Well, here’s one reason to be a little bit optimistic.

It comes from Lorcan Roche Kelly of Agenda Research:

Another bullish sign for today’s measures was the lack of unanimity on the governing council for the measures announced. If someone — presumably the Bundesbank — is dissenting, it is almost always a good sign for the effectiveness of new policies.

Normally, in monetary policy, you hope to see unanimity. But this is a clever point. The Germans are loathe to support anything that actually reinflating the economy through monetary policy. Tight money is kind of a religion at the Bundesbank (the German central bank). So if the Germans don’t like what Draghi is doing, it’s a sign that he’s doing something potent.

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