Hello and welcome to our live blog on the European Central Bank’s press conference, which follows the governing council’s vote earlier today.
Today’s presser is held in Kranj, Slovenia. ECB president Mario Draghi will be flanked by Vitor Constâncio, ECB president, and Marko Kranjec, governor of the Slovenian central bank.
All times are London time.
14.26 And that’s that from Kranj. The ECB president painted a gloomy picture of the economic outlook, but there was little indication of what the central bank would do if conditions worsened.
14.25 Time for one more question. This one on the possibility of a conflict of interest between supervising banks and monetary policy. “We have to make sure that we have an organisation that ensures separation between monetary policy decisions and banking supervision,” Mr Draghi says.
14.20 Mr Draghi reiterates for the umpteenth time that the ball is now very much in the court of governments: “The ECB is there to make an environment that is conducive to reforms, but the decision is with governments,” he says.
14.15 Marko Kranjec, governor of Slovenia’s central bank, says the country’s borrowing costs “don’t reflect fundamentals.” The governor says he expects them to fall in the months ahead. A related question from Peter Spiegel:
14.10 Mr Draghi says the degree of financial fragmentation in the eurozone has lessened since the OMT was announced. Spain’s recourse to central bank financing has gone down in the past month, he notes. However, he sounds a note of caution, saying that volatility remains high and governments will have to persevere in economic and financial reforms if financial conditions are to continue to improve.
He says it’s hard to say what an acceptable level of financial fragmentation is, but his basic message is that borrowers in different member states with similar economic prospects — whether they be households or businesses — should be subject to similar interest rates.
14.04 The ECB president commends the measures taken by Lisbon: “That’s an example of very, very significant progress made by governments. The political situation is a strong situation. We share completely the concerns about the difficult social situation but the reform agenda is firmly in place,” he says.
However, he reiterates that Portugal would not gain access to the OMT until full primary market access is obtained by sovereigns. “The OMT is not a replacement for a lack of primary market access,” he says.
13.59 Standard Chartered’s Gerard Lyons notes that Mr Draghi paints a gloomy picture of the economic outlook for the eurozone:
13.56 Good question from Michael Steen: What’s the point of a rate cut given the degree to which the transmission mechanism is broken? The ECB president parries it though, saying that the ECB doesn’t pre-commit on rates.
The FT’s Chris Adams also approves of Michael’s dress sense (there’s been a lot of discussion on twitter about a Dow Jones/WSJ journalist opting to wear a hoodie to the presser):
13.51 Mr Draghi says he would regard any voluntary restructuring of Greek government debt as monetary refinancing, forbidden by the EC Treaty. The ECB president says activating the OMT is now very much in the hands of eurozone governments.
13.46 Mr Draghi says there was no discussion at today’s meeting of further rate cuts. He refuses to answer the question on Spain. The ECB president says he has an “open mind” about publishing minutes of the governing council meetings. At the moment, these are only published with a 30-year delay.
13.45 The questions begin. The first two are on the possibility of another rate cut, and on the possibility of a Spanish bailout.
13.44 The ECB president concludes his opening statement. Here are the highlights.
Economic growth is expected to remain weak in the near term with ongoing tensions in financial markets and economic uncertainty weighing on sentiment. Recovery will be gradual. The risks continue to be on the downside.
Inflation expectations continue to be firmly anchored. Mr Draghi acknowledges last month’s inflation figure of 2.7 per cent was higher than expected, but expects inflation to decline to below 2 per cent over the course of 2013. Risks to inflation are broadly balanced.
The ECB president says the OMT has helped alleviate market tensions. He says that when a bailout programme is under review, the central bank will not buy bonds.
Loans to the private sector declined in the year to August. The amount of loans to households remained unchanged. The segmentation of financial markets is restricting the supply of credit.
Mr Draghi says the ECB welcomes the commission proposal for a single supervisory mechanism, under which the ECB will take on responsibility for banking regulation. Mr Draghi says a single supervisory mechanism is “one of main building blocks” towards a proper economic and monetary union.
13.30 Mr Draghi takes the stage to deliver his opening remarks.
13.28 ECB watchers will be on the lookout for more detail on the central bank’s Outright Monetary Transactions (OMT) programme. Expect questions on the possibility of negative deposit rates and further cuts to the main refinancing rate later on in the years, as well on as the eurozone economy.
13.24 October’s governing council meeting was one of two that the ECB holds each year outside of Frankfurt. Michael has sent across some picture from the conference centre at Brdo, where Mr Draghi will shortly begin taking journalists’ questions.
13.15 Hello and welcome to today’s live blog. The press conference will begin at 13.30 UK time. The governing council opted to hold rates at this month’s vote. Here’s FT Frankfurt bureau chief Michael Steen’s take on the decision:
Michael Steen: The European Central Bank kept its main refinancing rate on hold at 0.75 per cent on Thursday, judging that for now there was no need to cut rates below what are already historic lows despite ongoing worries about the poor outlook for growth in the eurozone.
Mario Draghi, president, was due to give more details about the ECB governing council’s discussion surrounding the rate decision at a press conference at 1:30pm BST, when he was also likely to face further questions about the bank’s proposed bond-buying programme to help countries with high borrowing costs.
No country has yet applied for the ECB’s so-called Outright Monetary Transactions or OMT programme, which faced fierce opposition from the Bundesbank and German commentators.