Is the ECB really out of ammo?

The adverse market reaction to the ECB’s bolder-than-expected package of policy measures unveiled on Thursday reflected concerns, partly prompted by comments from President MarioDraghi, that the central bank is running out of policy ammunition.

Those concerns seem a bit overdone to us and we wouldn’t be surprised to see at least some of the market response reversed in the coming days and weeks. Nonetheless, monetary policy alone cannot address all of the currency union’s problems.