I have for some time now had the view that Ian Macfarlane and Glenn Stevens will be judged very differently by financial history. In fact, I think Stevens is at a reputational inflexion point right now--one that could see his legacy move from okay to very sketchy. Here is UBS on the sudden resignation of the ECB's hawkish Chief Economist, Stark:
"With Stark gone does Trichet still move ahead with an interest rate cut at his last meeting next month if the data warrants it? Or does Trichet wait because he is worried that investors will feel the ECB has becomes less concerned about inflation with Stark's resignation? But if Trichet waits then Draghi will face making that decision in his first meeting as ECB President in November. These questions matter. In a 2007 academic paper Kuttner and Posen (now at the Bank of England Monetary Policy Committee) found that changes in central bank governors had an unsually pronounced impact on financial markets. This is clearly shaping up to be the case now at the ECB, making the euro a sell on rallies even after this month's sharp decline from 1.45 to 1.36."
