Analysis: ECB seen struggling to keep market on side after mixed messages

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The European Central Bank's policy signals don't seem to convince investors any more, analysts say, whether it is trying to raise their expectations for interest rates or lower them

But four analysts told Reuters that the ECB's problems doing so have been more acute because of frequent changes to its policy message and what one described as a cacophony of voices among policymakers from the 20 countries that use the euro.

The ECB chief is pushing back, telling investors in Davos last week they should "revise their positions" - adding weight to earlier comments from Dutch and"They are trying their utmost to communicate clearly right now but they're suffering the consequences of having been behind the curve last year, and this is the price to pay for changing guidance as frequently as they have," Danske Bank economist Piet Haines Christiansen said.

It responded by committing at its Dec. 15 meeting to several more rate increases, although at 50 basis points apiece rather than the 75 bps in September and October. Analysts said the ECB had boxed itself in when Lagarde said last month it would raise rates by 50 bps at its "next meeting, and possibly at the one after that, and possibly thereafter".

"They're facing the contradiction of saying they would go meeting-by-meeting while at the same time committing to several rate hikes," said Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management.

 

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