Draghi

In Europe 6th June 2014

Draghi asserts his authority

MADRID | By JP Marin Arrese | A couple of years ago, Draghi rescued the Euro from its plight. Yesterday, he saved Europe from a protracted economic performance. By delivering more than expected by markets, he changed the rules of the game in monetary policy. His bold rate cut bringing funds hoarded by banking institutions into negative territory seems close to unconventional manoeuvring. His targeted 4-year massive 400 billion liquidity injection will prop up credit to enterprises and individuals, providing a robust boost to growth.

Markets 5th June 2014

What to expect from Draghi’s bazooka

MADRID | By Ana Fuentes and Jaime Santisteban | It’s a radical move because that’s what the eurozone needs. Besides cutting the ECB’s base interest rate from 0.25pc to 0.15pc, Mario Draghi also reduced deposit facility to -0.1pc. So EZ banks will either boost credit lending or pay to leave money in the central bank. Also, he offered banks new long-term funds. Market makers tell us what they make of the much-awaited package.

In Europe 5th June 2014

All eyes on the ECB

LONDON | Barclays analysts invite you to answer the following question: What action do you expect the ECB to take at its Thursday 5 June meeting? The survey closes at 10am London time on Thursday, 5 June 2014, and the results will be published at noon that day in the NY open edition of this publication.

In Europe 5th June 2014

Draghi will have to do more than lowering interest rates

MADRID | By The Corner | Head of economic analysis at Link Securities Juan José F. Figares explains that if the ECB only reduces interest rates (i.e. intervention and deposit rates), stock markets will plummet since investors’ expectations will not be fulfilled. Should the central bank activate a new conditioned LTRO and open the door to a new asset purchase program, he adds that markets will react neutrally first and then, they will become positive. Note that the Eurozone’s GPD grew only by 0.2% in the 1Q14, according to the Eurostat.

Markets 4th June 2014

Falling EZ inflation makes it tricky for Draghi

MADRID | By Francisco López | Markets are taking for granted that ECB’s chairman Mario Draghi is going to act tomorrow. What is not that clear is to which extent he will do it. The last inflation figures on the euro area -a greater fall than the expected in May, standing at 0.5% and thus worsening deflation risks- represent a convenient opportunity for those ECB’s members claiming immediate bold measures.

In Europe 29th May 2014

Draghi highlights credit constraints and risk of disinflationary expectations taking hold

LONDON | By Barclays analysts | ECB is going to cut its policy interest rate and/or announce targeted liquidity measures, with a view to support bank lending at the 5 June Governing Council meeting. In his remarks at the ECB Forum on Central Banking being held in Portugal, ECB President Draghi highlighted the risk of a negative spiral between low inflation, falling inflation expectations and credit for the euro area.

Markets 27th May 2014

EU’s problem is not in Germany but in France

MADRID | The Corner | The rise of the far-right Front National will harm more the European project than any economic recipe imposed from Berlin. In the end, Germany is indeed setting hard conditions for the EU integration, but at least is favoring it, whereas France’s Marine Le Pen has a clearly anti European speech and intends to bring power back to the countries.

World economy 16th May 2014

The ECB will play by the book

MADRID | The Corner | Mario Draghi says the ECB is comfortable with taking action in June, and markets see it as a more or less done deal. This time the Bundesbank is not likely to say a word, as basic economic theory shows there is not much else to discuss: when money is pumped into a system, it shows up either like inflation or growth. And the Eurozone needs both.

In Europe 15th May 2014

Draghi: when words replaced monetary policy

MADRID | By Carlos Díaz Güell | Definitely, Mario Draghi has turned communication into the essential tool for the European central bank’s policy to make sense without taking any measure at all. Month after month the ECB’s president resources to words instead of actions, but some analysts start to dislike this considering they have been long waiting for a move from the institution.

In Europe 12th May 2014

Time for ‘Draghilogists’

FRANKFURT | By Lidia Conde | Experts don’t agree about what can happen in the short and medium term in the Eurozone. The main critical voice is the president of Munich’s Ifo Institut, Hans-Werner Sinn, who believes that Europe is in a “resting phase” before the storm hits again. According to Germany, now is the time of the “Draghilogists”, i.e. those analysts who try to elucidate the ECB’s next step.

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