The European Central Bank just made Federal Reserve Chair Janet Yellen’s job a whole lot easier. The ECB merely extended its quantitative easing program by six months, instead of unveiling an increase to its monthly bond purchases, as many market participants expected. ‘I think [ECB President] Mario Draghi tempered his QE program because I think he could be potentially hoping that Yellen takes up the slack for him by raising rates and pushing the euro lower that way,’ said Michael Hewson, chief market strategist at CMC Markets, based in London. ‘[In a speech Wednesday], Yellen highlighted in the clearest possible terms that she was inclined to go for an increase in the fed funds rate when the Fed meets in two weeks.’ More easing from the ECB could have caused the Fed think twice about hiking rates when it wraps up its two-day policy meeting on December 16. A more potent stimulus could have weekend the euro even further, which is already close to parity with the dollar. Raising short-term interest rates in the U.S. could strengthen the dollar. TheStreet’s Scott Gamm speaks with Hewson.
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