Having jawboned markets beyond a point of no return, and leading to massive hedge funds losses described previously as a result of everyone being on the same (short) side of the EUR trade only for the ECB to disappoint, sending the EUR soaring the most in 6 years, the ECB seems unable to get over what many have dubbed its biggest communication snafu yet and continues to openly insert various feet in its various orifices.
The latest to confirm the ECB is still having nightmares about its Thursday decision was Austrian Ewald Nowotny who said markets failed to assess properly the signals the European Central Bank was sending last week, adding that analysts rather than the ECB were to blame for any misunderstanding.
Which, of course, is ironic since it was both Draghi and Nowotny who well into the leadup to the ECB meeting were aggressively talking down the EUR only to subsequently admit they have no firepower left to actually back up their relentless, and ridiculous, jawboning.
Reuters reports that when asked whether the ECB needed to review its communication strategy in light of the market reaction, Nowotny said the ECB had done nothing wrong.
"I think it was really a massive failure of market analysts," Nowotny told a news conference, adding that those analysts should have paid more attention to economic fundamentals. Which ones would that be: the -0.1% inflation reported for September "rebounding" to solid 0.1% for October and November? Or the 50% youth unemployment in Spain and Greece?
"I do not think that the communication policy of the ECB sent the wrong signal," he told reporters, adding: "There were exaggerated expectations in relation to the actions taken by the ECB in this situation. They were clearly exaggerated."
Yes, thanks to Draghi and, drumroll, Nowotny with such soundbites as the following from November 2:
- NOWOTNY SAYS `ECB HAS TO ACT' AS INFLATION TARGET TO BE MISSED
While the markets had failed to understand the ECB's guidance, Nowotny said the ECB should not let itself be influenced by signals sent in the opposite direction.
The comedy continued when Nowotny said that "the ECB can and will not let itself be pushed by the markets," adding that "it’s not our job to correct wrong expectations of individuals” and “it wasn’t the view of the whole market."
Which, of course, was a lie because it was his very boss, Mario Draghi who just last Friday launched a massive rally in the market, when asked by Mervyn King the ECB's chair's Friday speech was "deliberately designed to try offset some of the reaction yesterday?" to which Draghi had a response that shocked every central bank watcher in its brutal honesty that all that matters to the ECB at this point is the market: "Not really... well, of course."
Dear ECB, if you can't get your story straight, please at least coordinate your lies - you are starting to look very much like amateurs.