The longer it lasts, the uglier it gets... ECB stays put (predictably) on rates today is adding 57th month that the policy rates are deviating from the historical mean, with the 'hill' to mean reversion getting steeper:
Currently, mean-reversion implies an almost 200bps hike without overshooting. Factoring in historical overshooting, we are into 250-300bps territory. Good luck thinking that 'gentle' tapering or 'gradual' restoration or whatever else you might call it going to be painless...
Oh, and for all of this, what do we have on the rates side?
At least, for its pain, the Fed has boldly gone where no one, save for Japan, have travelled before when it comes to rates. Euro area, meanwhile, has been playing chicken with itself...
Currently, mean-reversion implies an almost 200bps hike without overshooting. Factoring in historical overshooting, we are into 250-300bps territory. Good luck thinking that 'gentle' tapering or 'gradual' restoration or whatever else you might call it going to be painless...
Oh, and for all of this, what do we have on the rates side?
At least, for its pain, the Fed has boldly gone where no one, save for Japan, have travelled before when it comes to rates. Euro area, meanwhile, has been playing chicken with itself...
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