In the short history of the European Central Bank, we have reached a stage in which its communication style has become its most fundamental policy tool. And after governor Mario Draghi sent explicit and unequivocal signals that the central bank will leave the current expansionary monetary strategy untouched for the time being–with the option of sovereign debt purchases included–, the way the ECB broadcast its messages will never be the same.
Draghi’s latest speech opened a new era this week, a new phase for the Eurozone’s central bank to accept a clear commitment over watching future interest rate moves and intervening with transparency, delivering the necessary information.
Until now, Draghi’s bravest moment had been the famous conference almost a year ago where he said: “…the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”
But on July 11, during the ECB’s council meeting, Draghi took a decisive step by announcing that the institution would keep interest rates low and it could even cut them down. Immediately, he was accused of having become a trader, but the ECB governor is just giving the European Monetary Union enough time to implement reforms. Furthermore, Germany will soon elect its future Chancellor and then face its responsibilities in the processes of the Banking Union and debt mutualisation.
In any case, the mostly bad-tempered industry of translating and deciphering the notes coming from the ECB and foreseeing the demise of the euro needs to update.