MADRID | By Francisco López | The ECB’s measures since June have been oriented to fight the ghost of deflation, increasing the Eurozone’s economic activity and, in an indirect manner, managing the euro’s depreciation. For the moment Mr Draghi has failed in the first two goals, although he has succeeded in the third one. The euro is plummeting –which is good news.
MADRID | By Álex García.
Guest post by Jean-Sylvain Perrig, UPB Chief Investment Officer | The US economy is back on track. Its second-quarter bounce was sharper than previously thought and it is expected to stay on a reasonably good path of 3% in the coming quarters, thanks notably to a rebound in capex, a falling unemployment rate and a sharp improvement in the real estate sector. That will further boost consumer confidence, which has already reached its highest level in seven years.
FRANKFURT | By Lidia Conde | What a relief! France is reinventing itself as it is Angela Merkel’s hope. However much Mr Draghi warns that the ECB will do whatever it takes to save the euro, all the fresh money in the bank will be useless unless “some members of the Eurozone” change their economic policy. This is Germany’s analysis of the Eurozone state.
MADRID | By JP Marin Arrese | Ever since Alan Greenspan moved at will financial markets behaviour, simply by talking up or down either expectations or exchange rates, central bankers have tried to follow suit. For all his merits, Mario Draghi lacks Greenspan’s skills. Even if he commands enough fluency in English, his messages sometimes are utterly ill placed. Yesterday’s underperformance in his press conference showed it vividly.
MADRID | The Corner | Mario Draghi finally unveiled the European Central Bank’s betting on further stimulating the eurozone: benchmark main refinancing rate will be cut from 0.15 per cent to 0.05 per cent and marginal deposit facility risen 0.1 per cent to 0.2 per cent. Also a programme to purchase a “broad portfolio of transparent asset-backed securities” will be in place from October this year. Thus, the ECB becomes the first central bank to announce large-scale asset purchases and negative deposit rates. Reactions were quick: the euro fell below the key threshold of $1.3 to hit a low of $1.2995.
MADRID | The Corner | Although it is not part of ECB’s mandate, last Friday in Jackson Hole, President Mario Draghi spoke about what needs to be done in the euro area to address the problem of high unemployment and weak economic growth. As Barclays analysts believe, the speech “represented a significant breakthrough in the ECB rhetoric and will probably have significant implications regarding the debate just about to start between European government on policies that need to be deployed to avoid a ‘triple-dip recession’ and a fall in outright deflation.”
SAO PAULO | By Marcus Nunes | Investors betting on fresh easing measures from the European Central Bank (ECB) were left empty-handed Thursday, propelling the euro to a one-week high against the dollar.
MADRID | By Francisco López | In the midst of the markets’ euphoria thanks to the sharp fall in the risk premiums of peripheral countries, the big commander came and ordered to stop. The president of the ECB, Mario Draghi, appealed to investors to be cautious facing the risks of a “fragile and weak” recovery in the Eurozone and about an inflation whose expectations on the medium-term have worsened.
LONDON | By Barclays analysts | The ECB left monetary policy unchanged as expected and strengthened the downside bias of its forward guidance somewhat. Mario Draghi insisted on the fragility of the economic recovery and repeated that the ECB would be ready to act should downside risks materialize. We still think that monetary policy should be kept unchanged at least for the next two years, but we acknowledge the risk of further easing should inflation and inflation projections fall further. Besides, liquidity measures could be introduced to support the financing of the economy.