Post will be updated after the event.
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Charts
AFTER
Eurosystem staff
macroeconomic projections for the euro area – ECB
Live blog recap:
ECB’s Draghi Reassures on Tools as Rates Stay Put – WSJ
Draghi Paints Gloomy
Picture but Signals No New Moves – WSJ
Mario Draghi painted a
far from happy picture of the state of the euro zone's economy, reaffirming the
central bank's pledge to keep its benchmark interest rate at or lower than
current levels for "an extended period of time."
ECB Bottom Line:
Draghi Is in No Hurry – WSJ
At Thursday's press
conference Mr. Draghi repeatedly passed up opportunities to add specifics to
what the ECB's remaining policy options are.
Draghi’s comments can be rephrased as: if deflationary forces increase
and/or headline inflation drops unexpectedly, the ECB will ease further. Bolder
steps that could be a major step to repair the monetary policy transmission
mechanism, however, are technically hard to implement and clearly controversial
within the Governing Council. Reverting to rather traditional interest rate
cuts could eventually still turn out to be the ECB’s first answer to new
deflation risks.
Draghi says ECB ready
to act, but unsure how – Reuters
The European Central
Bank is ready to take fresh policy action to support the euro zone economy but
has not yet worked out a detailed plan of which policy tool to use when, the
bank's president said on Thursday.
ECB Cuts Inflation
Forecast as Draghi Pledges Low Rates – BB
Draghi re-affirmed that interest rates will stay low for the foreseeable
future, after officials cut their inflation forecast for next year.
Draghi Hints Any New
Liquidity Tools Will Be Conditional – BB
ECB decides to wait
until 2014 – TradingFloor
The ECB's policy
meeting produced no new policy actions. Draghi indicated that the banks are now
the key, so policy is on hold for now. But come 2014, that
will change.
5 Takeaways From
Mario Draghi’s ECB Presser – WSJ
Forward Guidance Has Just Got Longer Term * Don’t Underestimate the
Toolbox * LTRO Talk’s Getting More Nuanced * Stressing the Value of Bank Tests
* Sit Back and Wait
Nothing but a ‘Merry
Christmas’ from Draghi – Danske
Bank
We think the ECB will be surprised by a low inflation print for December
and this could trigger further easing (possibly a deposit rate cut) in early 2014…Last
month Draghi said, referring to negative deposit rate, that “we are technically
ready and it is part of our artillery, and in a sense it also answers the
previous question about what we will do if we see a low rate of inflation”.
BEFORE
Q&A on negative
ECB deposit rate – Nordea
What to Expect From
ECB Meeting – WSJ
The ECB is widely expected to keep interest rates unchanged at record
lows following Thursday's monthly meeting of its rate-setting board, after
surprising markets with a cut in its key lending rate to 0.25% last month.
Watchful ECB likely
to keep powder dry tomorrow – TradingFloor
I expect no action from the ECB at its December meeting Thursday, but
President Mario Draghi, backed up by new, modest, staff projections, will keep
the overall tone of the meeting dovish.
ECB's Draghi needs to
plunge a fork into the EURUSD rally – TradingFloor
The sluggish, yet persistent, EURUSD rally of the past four weeks may be
coming to a close, but ECB President Mario Draghi is the only one who can
really put a fork in it. The US employment report,
out Friday, is looming as well.
Will the ECB’s
minutes overrun? – Money
Supply / FT
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?
PREs, VSPs, and the
ECB –
Krugman
/ NYT
Whatever Praet may privately think, he and his boss have to deal with
Europe’s Very Serious People — people who believe in austerity regardless of
circumstances, and who also say things like this, from the Bundesbank’s Jens
Weidmann, declaring that “the money printer is definitely not the way to solve
[Europe's problems]“.
Praet explicitly recognizes that non-standard measures can also be used
to fight “falling prices”, and not just to address financial fragmentation as
in the Trichet doctrine. This is a pretty important departure from a doctrine
point of view and may open the door to more agressive actions.
Draghi Shares Exchange-Rate Views With Central
Bankers – WSJ
ECB Denies Comments Hungarian
Counterpart Attributed – Portfolio
An important but also
confusing speech by Peter Praet on disinflation – ECB
Watchers
Praet explicitly recognizes that non-standard measures can also be used
to fight “falling prices”, and not just to address financial fragmentation as
in the Trichet doctrine. This is a pretty important departure from a doctrine
point of view and may open the door to more agressive actions.
The increasing north/south divide that has accompanied the euro area’s
drawn out crisis has lead to the balance of power shifting to the periphery.
Or: doves in the ascendant. Interesting too that the Bundesbank might thus be
pushing for ECB minutes to be released in order to quell those national
interests.
We expect very dovish signals from the ECB at this week’s monetary
policy meeting, but no change in key rates * Risks are clearly skewed towards
another rate cut and the door is likely to be left wide open to all
non-conventional measures including a negative deposit rate, LTROs or possibly
even QE * We could easily see the ECB announcing new liquidity measures to ease
concerns around the turn of the year.
Presenting Italy, a central plank in
the argument for a new vLTRO or at least an extension of what we already have
Economists at Denmark’s biggest banks
predict the nation’s benchmark interest rate, which has been negative since
July 2012, won’t climb over zero until 2015 marking an historic experiment with
extreme monetary policy.
Euro area inflation is below the ECB’s 2% target and
declined to 0.7% in October. The decline is due to a combination of low wage
pressure and the end of the super-cycle in commodity prices. We expect
inflation to remain far below the ECB’s target in 2014-15.
If the dataflow deteriorates quickly, and the
technical conditions to get private assets purchases – which we think would be
fundamentally the right thing to do – cannot be met with commensurate speed,
then a negative deposit rate cut or a liquidity measure would be the natural
first port of call.
“According to Mr. Draghi, OMT is for a systemic crisis
in the euro and will apply across the eurozone.” If
Noonan is accurately relating his conversation with Draghi, it seems to change
the very nature of OMT.
There are significant uncertainties for at most a
modest benefit. If the ECB choice was an investment choice, one would say that
the Sharpe ratio is unfavourable