Mario Draghi. Image by Getty.

Hello and welcome to the live blog on ECB president Mario Draghi’s press conference.

The ECB’s monetary policy statement is due at 12.45. Mr Draghi’s press conference begins 45 minutes later.

All times are UK time.

14.54 This live blog is now closed.  Here are the main take-aways.

- The ECB could restart government bond buying – but there is no immediate intervention. The ECB “may undertake outright open market operations of a size adequate to reach its objectives,” Mr Draghi announced.

- But a “necessary condition” is that governments “stand ready” to activate EFSF/ESM’s bond buying tools. That would give the ECB political cover to act.

- No limit set to the size of possible ECB intervention. That’s a big difference to the ECB’s previous bond buying programme, which was described as “limited”.

- Financial markets are disappointed at the lack of immediate intervention. Spanish ten-year bond yields are above 7 per cent again.

- The ECB could also undertake “further non-standard monetary policy measures,” Mr Draghi said, without giving further details.

- The modalities of the ECB’s enhanced crisis response will be designed “over the coming weeks”.

- The Bundesbank opposed ECB bond buying, Mr Draghi acknowledged. That means it could still be an obstacle in weeks to come, undermining the ECB’s effectiveness.

- “The euro is irreversible,” Mr Draghi said.

- The main policy interest rate was left unchanged at 0.75 per cent.

14.53 Here is some scepticism from BNP Paribas.

The ECB did not change its monetary policy nor did it provide us with details about possible future actions. Stress on sovereign debt markets has to be addressed and the ECB could help. But once more, the ECB through the ball back in the politicians’ court. A restart of the SMP is possible, but distressed countries have to request help from the EFSF/ESM first…

14.47  Holger Schmieding, European analyst at Berenberg Bank, is more upbeat than financial markets:

“Draghi has delivered. And Germany should say thank you for that. Although the ECB did not start to actually intervene in bond markets today, Draghi sent a strong message that the ECB will do all it takes, including interventions in sovereign bond markets…This can stop the gradual slide of the German economy into recession and allow the overall Eurozone economy to return to growth around the turn of the year, with Germany likely to enjoy strong growth again next year.”

14.42   The lack of immediate action by the ECB has disappointed markets. Mary Watkins writes:

By mid afternoon, yields on 10-year Spanish debt were up 19 basis points at 6.91 per cent, while yields on benchmark Italian debt were 24bp higher at 6.17 per cent.

Spain’s Ibex index was up nearly 5 per cent, while Italy’s FTSE MIB was more than 3 per cent higher.

 14.32 The press conference is now over.

14.30 There will be “full disclosure” under the ECB’s revamped bond buying progamme, Mr Draghi said. Does that mean it will say how much of each countries bonds it has bought?

14.28 Mr Draghi explains what he meant by his statement that  the euro had to be “irreversible”. “It says ‘it is pointless to bet against the euro’.”

14.24 Here’s a good summary of the press conference so far for the Twitterati…

ECB in 5 words: Draghi didn't win round Buba

August 2, 2012 2:16 pm via webReplyRetweetFavorite

@chrisadamsmkts

Chris Adams

14.22  By focusing bond buying on the shorter end of the yield curve, the ECB would remain consistent with “classical monetary policy,” Mr Draghi said. That was in response to a question about whether targeting longer term rates might have been of more help for the real economy.

14.20  Mr Draghi is keen to stress the sequencing: activation of the EFSF/ESB bond buying  instruments is a “necessary condition” for an ECB response, he argued. Actions by governments would be “as essential” as ECB action to restore its monetary policy transmission mechanism.

14.19 Julian Callow, European economist at Barclays, writes in a note:

We interpret this as a clear sign that the ECB is prepared to change policy significantly at its September meeting, in terms of purchasing debt without claiming seniority subject to the EFSF being deployed to buy government debt. Overall this is in line with our expectation; it still will depend on whether Spain and Italy (which have a summit now proceeding) will call upon the EFSF to do this.

14.15 Here is the FT’s updated news story

Biggest about turn At a press conference after a governing council

An ECB spokesman has confirmed that Mario Draghi, president, has written a brief but pointed letter complaining that eurozone governments have still to agree a successor for Spain’s José Manuel González-Páramo, whose term on the central bank’s six-man executive board expired at the end of May. The vacancy has increased the workload of the five remaining board members — not exactly what they need with the eurozone crisis re-escalating.

Lucas Papademos, a former ECB vice president, and Axel Weber, an ex-president of Germany’s Bundesbank, took academic posts in the US before springing back into action — as Greek prime minister and UBS chairman respectively. Now Athanasios Orphanides, Cyprus’s former central bank governor, is taking a job teaching at the MIT Sloan School of Management, also in the US.

With global attention fixed on Spain’s bank recapitalisation plans, little was made last week of the appointment of Luis Maria Linde, a central bank veteran, to the top job at the Banco de España. But it did not go unnoticed by ECB lawyers.

The reason?

But Wednesday’s governing council meeting produced a significant change: a cut in its main interest rate below 1 per cent — more-or-less ruled out during the 2009 recession — was put firmly on the agenda for July’s meeting. Like other central banks, the ECB appears headed towards the “zero bound”, the floor at which policy rates can move no lower.

Does that mean the ECB is moving closer to US or UK style “quantitative easing” to boost the economy when rates cannot be cut any further? Possibly, but not necessarily.

In fact, using Latvia’s rebound from deep recession (a near 25 per cent fall in output starting in 2008) as an example, turned out to be a good way for Mr Asmussen to send a pretty uncompromising message to crisis-hit eurozone countries.

In a report released on Monday, the European Court of Auditors argued a risk officer could help prevent demarcation lines within the ECB obscuring a complete picture of possible problems and ensure a “comprehensive view” was taken.

Its conclusions were eye-catching because of the risks involved in the ECB’s massive support for the eurozone’s banking system, which have seen its balance sheet balloon to around €3 trillion.

His main message was the need for eurozone politicians to come up with a vision for the union’s future. But he also admitted that his university thesis was sceptical about the idea of a single currency area.

The Financial Times reported on Tuesday how at least some Greece banks are being kept alive by about €100bn in “emergency liquidity assistance”, a facility meant to be used only by banks in the direst of need. The massive demand followed the ECB’s decision to exclude four Greek banks from its regular liquidity providing operations because of uncertainty over their future financial strength.