While monetary “hawks” tend to reject any further monetary easing from the European Central Bank like the plague, doveish types are afraid that the ECB’s latest round of easing didn’t go far enough, and may have come too late anyway. The doves’ point of view is presented by Katie Martin in an op-ed for the Financial Times, who backs up her argument with an array of alarming economic data from recent weeks.
- Martin notes that the euro is falling once again, while government bonds headed higher, and key indices of economic activity including manufacturing and service industries appear to be grinding to a halt, especially in key eurozone economies like Germany. One economist, Phil Smith of IHS Markit, calls the manufacturing numbers “simply awful.” Yikes.
- Other economists agree that the German manufacturing data point to a possible recession in Germany’s export-dependent economy, Europe’s largest.
- While members of the new “Hanseatic League” have been critical of ECB policies in recent months, with attitudes typified by Dutch central bank president Hans Klaat, who called the lower deposit rates and fresh bond purchases “disproportionate,” Martin believes this stance has been rendered obsolete by the negative trend data just revealed. Indeed she warns the ECB may be doing too little, too late, including lukewarm efforts to lean on national leaders to implement more fiscal stimulus with increased government spending.