Best Laid Plans Go Awry

While they both converted to “restriction removal”, it seemed until last week that the Fed and the ECB had laid out different plans, the Fed opting for a decisive, pre-emptive path, while the ECB was choosing a more prudent, data dependent and meeting-by-meeting approach. Yet, the employment report released last week provided more evidence that the softening of the US economy is proceeding at a glacial pace, while Christine Lagarde’s latest testimony at the European parliament expresses a readiness to engage in back-to-back cuts, the Governing Council –
even its hawkish wing – getting more concerned about the deterioration of the real economy.