A change in travel plans by Jean-Claude Trichet, European Central Bank president, has caused a flurry of excitement in financial markets this morning. He is leaving early a Reserve Bank of Australia conference in Sydney in order to get back for Thursday’s European Union leaders summit in Brussels. The buzz in markets is that this could be a sign that a bail-out is being prepared for Greece.
It is a good story to trade on (the euro is up a bit) but is such speculation credible? I am not so sure. It didn’t help that the first reports said Mr Trichet was returning for an extraordinary meeting of the ECB’s governing council - an understandable mistake for anyone in Australia not familiar with the EU’s array of councils and presidents.
But my understanding is that the ECB president always intended to be at Thursday’s summit in Brussels, which was meant to be about longer term economic strategy - on which Mr Trichet has strong views. The problem was logistics. He was in frozen north Canada at the weekend for a meeting of G7 finance ministers and central bank governors. Then he headed for Sydney, and there were various options for his journey back to Europe. Leaving earlier means he will have time to recover from his globetrotting (not to mention some extraordinary variations in climate) and arrive a little fresher for his talks with European leaders.
Does that mean Mr Trichet will have a copy of a Greece bail-out plan in his hand luggage? Never say never, but it is also possible that Mr Trichet feels he needs to be back to stiffen backbones in Brussels. His message from the G7 was that when it came to dealing with its fiscal crisis, the ball remained in Greece’s court, and Mr Trichet doesn’t like being pushed around by financial markets.
UPDATE. An ECB spokesman has just confirmed what I thought. “The whole absurd situation came from the fact that someone in Australia said that Mr. Trichet was cutting short his stay. It became a big story, while Mr. Trichet only chose an earlier flight because he was afraid he would miss a connection,” spokesman Wiktor Krzyzanowski told Reuters.
