The ECB ready to act in relation to Greek situation

The uncertainty concerning Greece has had a general muted market impact, and so far soft words from the ECB have been enough even though the ECB statement could have been more explicit.

The ECB did thus not use the opportunity to step up QE purchases under the previously announced presummer frontloading. In both May and June the ECB purchased EUR63bn assets, which is a very moderate increase compared to the previously announced monthly purchases of EUR60bn.

When the Greek government called for a referendum on the Institution's proposals, the ECB sent out a statement signalling its readiness to act if the Greek situation had implications for the monetary policy stance. 

However, the ECB has repeatedly stated that the QE programme has some embedded flexibility, which could be used if Greek contagion intensifies. Added to this, two of the ECB executive board members have mentioned the European Court of Justice's judgment that the ECB has 'broad discretion' in its open market operations. 

"This suggests that the ECB could change the OMT conditionalities if needed", opines Danske bank.