mario draghi

Claire Jones

Mario Draghi has warned that, though unlikely, Europe’s fledgling economic recovery could be derailed by the turmoil in Ukraine.

While the direct financial and trade linkages between the European Union and Ukraine are small, the ECB president told lawmakers in Brussels yesterday that the geopolitical dimensions of the tensions could have a strength that goes beyond mere statistics on capital and current accounts.

One of the most important economic aspects of those geopolitical dimensions is the supply of Russian gas to the EU.

The EU’s reliance on Russia has dwindled over the past decade, but it still matters. The relationship still accounts for 30 per cent of all gas imported into the bloc and when Gazprom cut off Ukraine in 2009, the disruption to energy supplies hit the EU hard. And though the EU is now less reliant on receiving its gas via this route, there’s no way of Russia using the gas button against the Ukraine without it having some impact on the rest of Europe.

The popularity of this tweet by Reuters’ Jamie McGeever highlights the interest this geopolitical dimension has received:

But there are good reasons to bet against Russia turning off the gas tap, regardless of whether or not one believes relations with the EU are the direst since the Cold War. Read more

Claire Jones

January’s eurozone inflation number, out earlier on Monday, showed price pressures in the currency bloc are not quite as subdued as first feared, registering 0.8 per cent – a touch higher than Eurostat’s initial estimate of 0.7 per cent.

It’s hardly a game changer: inflation is still less than half the 2 per cent target. But the slightly better figure will reduce pressure on the European Central Bank a little after it faced renewed calls to ease policy following the release of the flash estimate.

However, the detail of this morning’s release suggest disinflationary pressures might be even worse than feared. This excellent chart from Marchel Alexandrovich of Jefferies International shows why: Read more

How will sovereign bonds will be handled in the euro area’s forthcoming banking health checks? This is a vexed question and markets seize ravenously upon any clues.

Mario Draghi, the European Central Bank’s president, offered a flicker of information on Tuesday in a letter to Sharon Bowles, the chair of the European Parliament’s Economic and Monetary Affairs committee. Sovereign exposures will indeed bit included in the stress test, he said – confirming previous declarations from the ECB.

However, it is “not foreseen” that bonds in the held-to-maturity category of banks’ books will be adjusted to reflect market valuations – otherwise known as marked to market. That will come as a relief to banks that are holding portfolios that have slumped in value, but analysts caution that it is far too soon for lenders to relax. Read more

Michael Steen

(Getty)

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

 

Michael Steen

Mario Draghi, the European Central Bank president, pulled off the feat of sounding incredibly doveish today while keeping rates on hold and actually making sure his room for manoeuvre remains as wide as possible. Here are five quick takeaways from the press conference following this month’s meeting: Read more

Hello and welcome to the FT’s live blog on the European Central Bank’s rate decision and press conference. All eyes on Thursday are on the ECB and what it has left in its tool kit as gloomy data throws further doubt on the recession-bound eurozone economy.

Many economists are expecting what would largely be a symbolic cut in interest rates. The governing council’s vote is due at 12.45 (BST) and ECB President Mario Draghi will meet the press at half past one.

By Claire Jones and Lindsay Whipp. All times are UK time.

 

Claire Jones

Mario Draghi, president of the European Central Bank. Image by DANIEL ROLAND/AFP/Getty Images.

Mario Draghi, president of the European Central Bank. Image by DANIEL ROLAND/AFP/Getty Images.

Hello and welcome to today’s live blog for European Central Bank president Mario Draghi’s first press conference of 2013.

Mr Draghi will begin speaking at 13.30. All times are UK time.

 

 

14.40 The live blog is now closed.

14.38 The ECB president struck a very upbeat tone at today’s presser.

Mr Draghi is clearly delighted with the recent developments in financial markets (see 13.46), though he warned against complacency on the part of governments and added that we were yet to see any signs of an economic recovery.

Because markets were a lot more positive, the governing council was unanimous in deciding to hold rates and no-one even bothered to discuss the option of a cut, which now looks unlikely to happen in the coming months.

14.30 The questions end. Recap to follow.

14.28 Contagion is now working in the eurozone’s favour. “There is a positive contagion when things go well and that’s what’s in play now,” he says.

Despite the recent progress made, however, Draghi say DON’T relax. Which is all well and good, but it doesn’t make for a decent t-shirt does it?

He urges governments to keep up the good work and continue to implement structural reforms.

 Read more

Claire Jones

Mario Draghi, ECB president. Image by Getty.

Mario Draghi, ECB president. Image by Getty.

Hello and welcome to today’s live blog on the European Central Bank’s press conference, which follows today’s governing council vote.

ECB president Mario Draghi will meet the press at half 1.

All times are UK time.

 

14.30 And that’s it for the final ECB presser of 2012.

The most important developments were the suggestions that a rate cut had been discussed (and that some members of the governing council had supported it at the December vote) and the “growth” downgrades.

14.26 The ECB president says its “pointless” talking about eurobonds now. Why so? Because it would be pointless to talk about mutualising risk before you have put in place rules that limit fiscal discretion. Eurozone members have to rebuild trust first. “It will become realistic when trust is re-established,” he says. Read more

Welcome to a live blog of Mario Draghi’s press conference from ECB HQ in Frankfurt. With rates held and Mr Draghi already having worried investors with his remarks on Wednesday about a slowing German economy, attention will be on what more the bank’s president has to say about the main driver of Eurozone growth. Brought to you by Ben Fenton and Ben Hall.

 

14.47: That’s it for this live blog, but….

…the last word goes to the FT’s Frankfurt bureau chief Michael Steen (well it is his city and his newspaper). His view of the most interesting line from the Draghi press conference:

“Pressed on ways ECB might ease Greek funding problems, Draghi said the bank already agreed to send back any profits it made from Greek bond holdings to the central bank in Athens which could then be transferred to government. The ECB was “by and large done” helping Greece within its mandate he said.”

14.45: Here is an instant reaction from Howard Archer, chief UK & European economist at IHS Global Insight:

ECB President Mario Draghi appeared to ease open the door to a cut in interest rates over the coming months and potentially as soon as December. Potentially significantly when asked whether the ECB had discussed an interest rate cut at their November meeting, Mr. Draghi commented that “we always discuss all instruments.” This contrasted to his comments after both the September and the ECB meetings, when Mr. Draghi said that the ECB had not discussed cutting interest rates. Mr. Draghi also commented that the ECB stands ready to act on standard monetary policy as well as on non-standard policy. Interestingly, though Mr. Draghi indicated that the ECB had not discussed negative deposit rates (they were cut to zero in August).

Furthermore, Mr. Draghi acknowledged that the Eurozone growth situation and outlook had weakened recently, and hinted that the ECB’s GDP growth staff projections would be revised down in their December forecasts. The ECB’s statement observed that “most recent survey evidence for the economy as a whole, extending into the fourth quarter, does not signal improvements towards the end of the year.” Furthermore, the ECB considered that “growth momentum is expected to remain weak” in 2013, largely due to the need of balance sheet adjustments in both the financial and non-financial sectors, an uneven global recovery and high uncertainty. Mr. Draghi has also expressed concern recently over very high and rising Eurozone unemployment. Reinforcing this downbeat assessment of Eurozone growth prospects, the ECB statement observed that “the risks surrounding the economic outlook for the euro area remain on the downside.”

Meanwhile, the ECB’s view on inflation does not appear to preclude an interest rate cut in the near term. While the ECB expects Eurozone consumer price inflation to remain above 2.0% and at elevated levels for the remainder of 2012, the bank sees inflation “declining to below 2.0% again in the course of next year”. The ECB regards long-term inflation expectations as “well-anchored” and believes that underlying price pressures should remain moderate, with the result that current levels of inflation should be “transitory”.

 Read more