Why the hawks reigned at ECB meeting?

It is quite clear from European Central Bank's (ECB) much smaller than expected stimulus yesterday, that hawks might have reigned the ECB meeting. Bundesbank president, Jens Weidmann is much known hawk, who had expressed clear distaste for further stimulus before the meeting and after press conference it seems, his views are the ones that reigned in the meeting.

Why the hawks won the day?

As a matter of fact, evidence were plenty and quite visible, for everyone to see. However, most traders, analysts (including us) got on the wrong side, just for our blind faith in central banks' communications.

After repeated calls for actions from ECB president Draghi, ECB executive member Mr. Paret, even Finnish central Bank governor (known hawk), Mr. liikanen sounded dovish market participants started preparing for another bazooka from ECB, disregarding the calls of the hawks, since they are supposed to be few in numbers.

• It was a clear miscalculation. Presence of lesser hawks would mean monetary policy to stay dovish or at least not hawkish but presence of strong hawks, (which Mr. Weidmann is) might also mean lesser stimulus.
   
• Another miscalculation was the ammunitions. While hawks were less in numbers they had plenty of ammunition (evidence) to present their case, while doves had just inflation and emerging market crisis to show for, which got flushed away by evidences of rising PMIs, rising profits, lower interest rates, spread reduction among Euro area countries and companies, improving loan growth, improving money supply and higher core inflation. It was pretty easy to wipe out doves' lower inflation argument, citing lower energy prices.

Lot of people, last night just paid hefty prices for blind faith, instead of what should have been followed.....like FED elegantly puts it..."monetary policy to be data dependent".