European Central Bank presidents, current and former, are renowned for their fondness to “never pre-commit”. Even when the ECB opted to jump on the forward guidance bandwagon, it did so in a much more halfhearted way than its counterparts.
However, a few months ago Mario Draghi made quite a firm pledge to tell us by the end of the autumn how the ECB intended to go about producing an “account” of the governing council’s policy deliberations. Will Mr Draghi end up breaking his promise? Read more
Today the ECB cut its benchmark main refinancing rate to 0.25 per cent.
ECB president Mario Draghi is giving his monthly press conference
Follow the questions and reaction live here with capital markets editor Ralph Atkins and Emily Cadman
By Emily Cadman and Claire Jones
Hello and welcome to the FT’s live blog on Mario Draghi European Central Bank’s press conference.
Earlier the ECB kept its main refinancing rate on hold at 0.50 per cent as it tries to support the eurozone’s fledgling recovery. Mr Draghi will discuss the rate decision at a press conference in Paris at 1:30pm BST, when he is also expected to address the central bank’s stance on providing more liquidity to commercial banks as the maturity of two previous sets of cheap loans looms.
Blue sky thinking reaches Frankfurt (Getty)
Mario Draghi, European Central Bank president, has revived the idea of “reform contracts” — a policy that emerged in Brussels wonk circles last year and entails the EU contractually binding eurozone countries to economic reforms.
Speaking in Berlin on Monday, Mr Draghi told an audience of businesspeople that the eurozone needed two things to achieve sustainable growth: stabilisation and greater competitiveness.
To achieve the latter, he mentioned the need for “better ways of measuring economic performance – for example, more structural indicators of competitiveness.” And went on: Read more
Jackson Hole, the nearest thing on the central banking calendar to Davos, is upon us again, with some of the world’s most senior monetary officials set to head out to the upmarket Wyoming resort over the next few days.
Unlike the annual bash in the Swiss Alps, however, Jackson Hole, which kicks off on Thursday evening and closes on Saturday night, is usually a bit more than a talking shop. Of late, it has been the venue of choice for Fed chair Ben Bernanke to offer clues on where policy is heading.
But, while tapering looks like it is almost upon us, those hoping for more detail on the pace at which the US central bank will slow its asset purchases will not get it from Bernanke this weekend. Read more
Not the ECB (Getty)
The Bundesbank has weighed in on what forward guidance means for the European Central Bank and if you want the short version it boils down to: we have not forgotten about inflation.
The ECB pledged in July to keep interest rates at or below current levels “for an extended period of time,” which, as we’ve noted before has caused some confusion as to what precisely it means.
According to Germany’s central bank, that promise does not actually mean that interest rates cannot rise or that they will necessarily remain low for a long time. As it writes in its latest monthly report:
The decisive point in correctly interpreting this statement is that it is conditional on the unchanged obligation of the Eurosystem [the ECB and the eurozone’s 17 national central banks] towards its mandate of maintaining price stability (which means, operationally, medium term inflation that is below, but close to 2 per cent)… It follows that the ECB’s governing council has not bound itself. If higher price pressures become apparent in future compared to those expected now, forward guidance in no way rules out a rise in interest rates.
It’s the first day of August, traditionally the month many Europeans go on holiday, and there was a definite end-of-term feeling to the European Central Bank’s monthly press conference.
The bank unsurprisingly decided to keep its interest rates on hold and Mario Draghi, president, described data that “tentatively confirm the expectation of a stabilisation in economic activity as low levels”. So they see improvement, but they’re not calling the recovery just yet.
What else did we learn? Read more
Hello and welcome to our live blog on the European Central Bank’s press conference. The central bank did what markets expected and kept rates on hold. But ECB president Mario Draghi might offer some clues on what’s to come from the central bank in the months ahead and investors will also be looking for any comments on whether the ECB might start publishing the minutes from its governing council meetings. Draghi is due to begin speaking at 13.30 UK time.
By Claire Jones and Lindsay Whipp
Graffiti outside the ECB's future headquarters. (Getty)
Could the European Central Bank be learning a thing or two about managing the message? Ahead of Thursday’s interest rate-setting meeting, when policymakers will want to do nothing more than say “we’re holding steady”, it looks like the bank may come up with an eye-catching announcement to give everyone something to write about.
That something is the long-running and vexed question of why the bank that loves to tell you how transparent it is (well, at certain times, once you’ve cleared security and as long as you understand no quotes should be used from this conversation) keeps the minutes of its governing council meetings secret for 30 years. The practice makes it an outlier – the Federal Reserve, Bank of England and Bank of Japan all publish minutes of their monetary policy meetings within a month of the meeting that they cover. Read more
After ditching its long-standing policy of never commenting on future interest rates in order to launch “forward guidance” last week, the European Central Bank has landed itself into something of a pickle as to what it really means when it says rates will stay at or below their current level for an “extended period”.
Mario Draghi, ECB president, was pressed on the question immediately after launching the policy last Thursday and said:
Well, I said an extended period of time is an extended period of time: it is not six months, it is not 12 months – it is an extended period of time.
That is from the official ECB transcript and has punctuation that helps to suggest that Mr Draghi was refusing to say it was any given period of time. However it was also clearly open to misinterpretation and that is why a certain amount of briefing took place after the press conference in which officials made clear that what Mr Draghi meant to do was avoid giving an answer on a time frame, rather than suggest rates would be low for at least 12 months.
So today’s comments by Jörg Asmussen, a member of the six-person ECB executive board and close ally of Mr Draghi, were all the more surprising. Read more