Divyang Shah, Senior IFR Strategist
The ECB statement that followed simply says that “it was not Mr Asmussen’s intention to do so” with reference to guidance on the exact length of time.
The fact is that while it was not an intention it has happened and by packaging it as a gaffe the ECB can provide an unofficial definition of what “extended period” means without having to adopt an official stance.
This is how central bankers attempt to mould and shape market expectations especially when they don’t want to broadcast an official position.
If and when the time comes to shift gears and hike rates the ECB can simply point to the fact that it had no official position on the matter.
The Asmussen ‘gaffe’ along with the asymmetry in the forward guidance itself are intended to provide credibility to the ECB’s desire for the money market to move toward a flatter curve and for this to be maintained around likely Fed tapering in September.
