Weidmann said something the other day about lower inflation being in food and energy, and they should only react if there are second-round effects. This is just one man's opinion. But it is also a reality, to the extent that energy is a complementary good. As its price drops, the price of other things should rise, not fall.If anything, the high EURJPY should be feeling the heat from imported car competition, where Hondas are substitutes for Volkswagens. But nobody is bitching about EURJPY being up some huge amount. Because Japanese import gas, not cars.So they seem to not be worried about a high euro so much from a deflation side, but from a health of exporter side. Right now they are probably less worried about the health of exporters in various economies, because the US seems to be doing good, everything seems to be coming along okay.The ECB is primarily worried about money markets and funding, and reduced inflation expectations. They seem to think money markets and funding are doing okay with stocks and corporate and national debt issuance doing great, and there is not much more they can do from their end. It is more an issue of adjustments in high-unemployment economies which adjustments they don't want to slow down, and demand for loans, and reforms from various governments upon whom they want to keep the pressure for reforms.And again, they think inflation expectations if anything are recovering from some doubt a few months back, and will be helped along by continued economic improvement.So perhaps reduced fear for the health of exporters, plus the knowledge they aren't going to do anything about it anyway, and they don't want to sound silly, will mean minimized emphasis on any displeasure with the level of the euro. Even as people try to ask questions to get them to state such a displeasure.
Last edited by farmer
on April 1st, 2014, 10:00 pm, edited 1 time in total.