Draghi: echoes of Trichet at today’s presser
Those hoping that today’s ECB cut would signal a softening of the central bank’s stance in other areas, notably its purchases of government debt, will have been disappointed by Mario Draghi’s comments at his first press conference.
Mario Draghi with Jean-Claude Trichet. Image by Getty.
Jean-Claude Trichet may have now decamped to Paris, or possibly St. Malo, but listening to Mr Draghi today, it was as though he had never left.
Trichet’s final flourish
A moment in monetary policy history! Jean-Claude Trichet has just delivered his last scheduled speech as European Central Bank president. Addressing Berlin’s Humboldt university he did not produce any fireworks - there was no attempt to bounce Italy’s Mario Draghi into a rate cut at next week’s ECB governing council meeting. Instead Mr Trichet pushed his ideas for Europe’s future political union.
Earlier this year, Mr Trichet advocated a European finance ministry – an idea on which he expanded in his interview with the Financial Times earlier this month. The case for such a step had strengthened in recent weeks, he argued in Berlin – and he went further in arguing for a new kind of European federal system.
Trichet’s party gatecrashed
Fittingly, at the end of a career spent managing global economic crises, Jean-Claude Trichet’s farewell party took a dramatic turn in Frankfurt late on Wednesday.
Trichet and Draghi at the Alte Oper. Image by Getty.
As Europe’s statesmen - including Germany’s Helmut Schmidt and France’s Valéry Giscard d’Estaing - paid tribute to the departing European Central Bank president in the city’s Alte Oper, Nicolas Sarkozy in Paris suddenly announced his intention to gatecrash the festivities. Despite his wife just giving birth, the French president jumped on a plane to Frankfurt.
As the farewell ceremony drew to a close, Mr Trichet – along with Angela Merkel, German chancellor and Mario Draghi, the new ECB president – headed for two hours of emergency talks on the latest eurozone rescue plan in a backroom in the grandiose 19th century opera house.
Trichet talks
Jean-Claude Trichet, the departing president of the European Central Bank, talked to the FT’s editor Lionel Barber and Frankfurt bureau chief Ralph Atkins on Wednesday in London.
The transcript and story will appear on FT.com later this evening. But, until then, here’s a sneak peek at what the interview covers:
Trichet wants a more flexible fund
If only central bankers could rely on politicians! More than an element of frustration at the ways of governments was clear when Jean-Claude Trichet, European Central Bank president, gave evidence this morning to the European Parliament for the last time.
He urged European governments to “act together swiftly” to address a crisis that had taken on a “systemic dimension”. He also went further than before in hinting that the €440bn European Financial Stability Facility – Europe’s new bail-out fund – might not be up to the job, even if proposed enhancements to its powers are approved by Slovakia.
Trichet takes a bow
Jean-Claude Trichet holds his last press conference as European Central Bank president on Thursday. It is a moment in the ECB’s short history; Mr Trichet has been in charge for eight of its 13 years. But the time to dwell on such facts is limited. Instead a range of issues remain on the table. Here is a brief guide to what he might have to announce.
On ECB interest rates After September’s meeting, Mr Trichet deliberately left the door open for an interest rate cut. Since then the debate has swirled.
The week ahead in central banking
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Both the European Central Bank and the Bank of England will vote on monetary policy on Thursday.
The Monetary Policy Committee decision is out at noon local time (11.00 GMT). According to a Reuters poll, most expect the Bank to hold rates and maintain the stock of asset purchases at £200bn. However, a significant minority predict more QE, with most of these believing that £50bn is the amount that the MPC is most likely to plump for.
Though those expecting more QE in October are in the minority, the bulk of analysts do believe the Bank will expand its asset purchases at some point in the near future, with November considered the most likely option. The Bank also publishes the minutes of its FPC meeting on Monday at 09.30 local time (08.30 GMT), which may shed some light on the rather ambiguous statement that came out this week.
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Rate votes
The key event in next week’s calendar is the Federal Open Market Committee’s policy meeting, which Ben Bernanke announced at Jackson Hole would be a longer-than-usual two-day affair.
The week ahead in central banking
Our new week ahead email will help you to track the most important events in the central banking world. To see all of our email and alerts visit www.ft.com/nbe
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Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS
Ralph Atkins, Frankfurt bureau chief, has been writing about European economics and politics for the Financial Times for more than 20 years following an economics degree from Cambridge. He has been watching the European Central Bank and eurozone economies since 2004. He has previously worked in London, Bonn, Berlin, Jerusalem and Brussels. RSS
Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS
Claire Jones is Money Supply economics team writer, based in London. Before joining the Financial Times, she was the editor of the Central Banking journal and CentralBanking.com. Claire studied philosophy and economics at the London School of Economics. RSS
James Politi is US economics and trade correspondent for the Financial Times, based in Washington DC. He joined the Washington bureau in January 2008 following four and a half years as US deals correspondent covering M&A and private equity. James Politi joined the FT in London in 2000 with an MSc at the London School of Economics, and undergraduate degrees from Georgetown University and the University of Florence. RSS
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