The competition to succeed Jean-Claude Trichet, who steps down as European Central Bank president at the end of October, was a big story in February - when Axel Weber, Germany’s Bundesbank president, withdrew from the race. Since then it has gone quiet.
Now news agency reports from the European Union finance ministers’ meeting near Budapest, Hungary, at the weekend suggest a decision may not be taken until an EU summit at the end of June. Germany’s government “has decided to form its opinion close to that date,” Bloomberg reported Wolfgang Schäuble, the country’s finance minister as saying.
That sounds plausible. Read more
Showing masterly timing, Mario Draghi, Italy’s central bank governor - fast becoming the frontrunner to succeed Jean-Claude Trichet as European Central Bank president - has a full-page interview in today’s heavyweight Frankfurter Allgemeine Zeitung.
Its publication comes as Angela Merkel’s government scrambles to decide who it should back for the ECB job after Bundesbank president Axel Weber self-destructed last week.
Under the headline “everyone should follow Germany’s example,” Mr Draghi not only draws lessons from Germany’s impressive economic rebound. He says exactly the sorts of things a German would want to hear from a central banker – the importance of combating inflation and of pursuing stability-orientated politics, how national governments should take responsibility for sorting out their own finances, etc. Read more
During the eurozone debt crisis, European Central Bank policymakers (unlike politicians) have generally resisted the temptation to blame financial markets for its woes. Jean-Claude Trichet, its president, has just made an exception.
Giving evidence to the European Parliament, he warned some investors had an interest in talking up the prospect of “haircuts” – or imposed losses – on Greek and Irish debt. “Investors that are ‘long’ always lose money when you practice these ‘haircuts’. Those investors who are ‘short’ make money,” he said. Read more
The euro has plummeted following the ECB press conference. Markets, it seems, were expecting a more bullish overtone from the press conference that followed today’s rate-hold decision.
FT Alphaville posted earlier on key phrases to watch for as signs of an imminent rate rise – but “strong vigilance” and “heightened awareness” were notable by their absence. Not that we – or RBS, who worked out the code words – had expected them today. Read more
The European Central Bank has struck a tougher stance on inflation, increasing the chances of an interest rate rise and sending the euro higher in spite of the eurozone debt crisis.
Jean-Claude Trichet, president, said on Thursday that the ECB had never ruled out an increase in official borrowing costs and its actions to combat inflation were “disconnected” from its steps to prop up the eurozone banking system. Read more
The euro surged higher on Thursday, hitting a one-month high against the Swiss franc after Jean-Claude Trichet, chairman of the European Central Bank, warned of inflationary risks in the eurozone.
Mr Trichet struck a hawkish tone after the central bank’s policy meeting – at which it left its main lending at 1 per cent – emphasising that the ECB was prepared to raise interest rates to keep prices stable. “Risks to the medium-term outlook for price developments are still broadly balanced, but could move to the upside,” he said. Read more
Frankfurt-based journalists spent a convivial evening with Jean-Claude Trichet on Monday. After a grilled salmon dinner at the European Central Bank’s headquarters, the ECB president took questions for about an hour. Much of what he had to say was familiar – the misplaced scepticism (especially in the US) before the euro’s launch, the ECB’s success in keeping inflation under control, and so on. Although looking relatively relaxed, Mr Trichet did not let his guard slip. So he refused to comment, for instance, on who might succeed him when his eight-year non-renewable term expires next October.
But he was prepared to be outspoken on the need for further deepening Europe’s economic integration. Read more
Ben Bernanke, the US Federal Reserve chairman, was forthright when he spoke at a European Central Bank conference in Frankfurt this morning. As reported on ft.com, he defended the Fed’s latest quantitative easing measures, and sought to turn the fire instead on China.
As I predicted in a previous post, Jean-Claude Trichet, ECB president, avoided any great clash with his US counterpart, whom he described as “a great member of the brotherhood of central bankers”. Others at the ECB may worry about further dollar weakness. But the ECB president repeated how US authorities also saw a strong dollar as important. On Mr Bernanke’s broader points about tackling global imbalances, Mr Trichet was also supportive.
But Mr Trichet seemed unnecessarily defensive of the eurozone at times. He interjected at one point that Europe’s monetary union was broadly in balance, even if some countries (Germany) had large surpluses. As far as I could tell, Mr Bernanke was not referring to Germany in this context at all. Read more
Jean-Claude Trichet, ECB president, sometimes refers to the “brotherhood of central bankers”. He rarely criticises, even indirectly, his colleagues elsewhere in the world. At an ECB conference in Frankfurt that has opened this afternoon, Mr Trichet noted recent comments by Ben Bernanke, the US Federal Reserve chairman, describing an inflation rate of “about 2 per cent or a bit below” as consistent with the Fed’s mandate. The developed world’s two largest central banks “could hardly be more closely aligned” on inflation aims, he exclaimed.
But he drew a clear distinction when it came to the use of “non-standard measures” by the world’s central bankers. One view was they could be used like “engaging the four-wheel drive” once the end of the road had been reached. That was a clear reference to “quantitative easing” by the Fed.
In contrast, the ECB used non-standard measures to “remove the major roadblocks in front of us”. Read more
With not much to decide at Thursday’s meeting - its strategy remained unchanged in spite of talk of further “quantitative easing” in the US and UK - the European Central Bank’s governing council embarked on what Jean-Claude Trichet, ECB president, described as a “literary exercise” to trim back the introductory statement he reads at each monthly press conference. I am not sure the results were entirely successful.
Vítor Constâncio, the vice-president, sitting next to Mr Trichet, looked pained when I described some of the new language as rather tortured. But I stand by my case. Read more