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By Frederik DUCROZET, Head of Macroeconomic Research Nadia GHARBI, Senior Economist Pictet Wealth Management
This Wednesday’s (15 June) unscheduled meeting of the ECB’s Governing Council was very important, if only in terms of timing and signal, following Isabel Schnabel’s bold speech on fragmentation on Tuesday. Our impression is that the ECB is now willing to act pre-emptively, before peripheral spreads get out of control. True, an explicit signal on flexible PEPP reinvestments and the decision to “task the relevant committees” were long overdue, and should have been part of last week’s policy announcements. But, the speed of the response, with BTP spreads arguably still close to manageable levels, marks a major difference with the old ECB reaction...
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