- Previous vote (10/2):
Held at 0.50%
- Latest vote 11/7
Cut to 0.25%
(recorded: ECB Press Conference)
- Next meeting:
- Q3 EZ revised GDP -0.4% vs -0.4% exp y/y
- Eurozone Markit services final PMI nov 51.7 vs 51.5 exp
- German Markit services final PMI nov 55.7 vs 54.5 exp
- Eurozone Markit mftg PMI final nov 51.6 vs 51.5 exp
- German Markit mftg PMI final nov 52.7 vs 52.5 exp
- October EZ unemployment rate 12.1% vs 12.2% exp
- EUR/USD – German Retail Sales Sink, But Euro Steady
- German retail sales oct m/m -0.8% vs -0.5% exp
- Are you going to bet against the ECB?
- German PPI oct y/y -0.7% vs -0.6% exp
- EUR/USD Squared up under 61.8% Retracement ahead of Key US Data
- EUR/USD – Finds Support at Key Level at 1.3550
- Daily Forex Update: EUR/GBP
- EUR/USD – German Retail Sales Sink, But Euro Steady
- Daily Forex Update: EUR/NZD
- EUR/USD – Resistance at 1.3550 Stands Firm
- EUR/USD and USD/JPY Technical Updates – 11/21 US Session
- EURUSD reasserts bearish tone to aim for 1.3295
- EUR/JPY breaks October top, hits 4-year high
- EUR/USD – Little Movement As Economic Sentiment Numbers Mixed
November 7 - The rate cut came as a surprise to some, but only the timing of it. The market already knew the bank was talking about LTRO and rate cut. Maybe it expected more discussions, but instead the ECB reduced the benchmark rate by 25bps to a new record low. This should be a drag on the EUR for a while.
October 2 – ECB held rates. Growth has been expectedly slow. Inflation slowed to 1.1% in September, which is the lowest since Feb. 2010. This might justify further loosening monetary policy to speed up the recovery, though Draghi notes that the current inflation development has been expected. Draghi did say that the bank would be ready for LTRO if needed.
Press Conference: Watch Video
September 4 - The ECB held rates at their historic low. Recent economic data suggests recovery is on track, so it is likely that Draghi will be moving away from loosening rhetoric, but not yet tightening as Draghi reiterated his commitment to keep policy loose for an extended period of time based on the inflation outlook, broad-based weakness in the economy, and poor monetary dynamics.
Press conference: Watch Video
August 1 – The ECB held the interest on refinancing operations (key rate) at 0.50%.
The economy has perked up slightly since the last ECB meeting. Let’s see if there are any changes in Draghi’s tone regarding details of forward guidance – meaning if Draghi will talk about specific conditions that is necessary to move away from the “high accommodative” policy stance.
In the press conference, Draghi addressed issues on forward guidance as well as ECB minutes. But don’t hold your breathe, it was an underwhelming QA session with not much to take away.
Recorded press conference: Watch Video
Learn about the European Central Bank
The ECB’s main objective is to maintain price stability within the Eurozone, defined as inflation around 2% year-on-year, as measured by the Harmonised Index of Consumer Prices (HICP).
It also monitors the banking sector as seen in its intervention during the 2007 credit crisis where it lent billions of euros to banks to stabilize the financial system.
In U.S. style central banking, liquidity is furnished to the economy primarily through the purchase of Treasury bonds by the Federal Reserve System. The Eurosystem uses a different method. There are about 1500 eligible banks which may bid for short term repo contracts of two weeks to three months duration. (wiki – http://en.wikipedia.org/wiki/European_Central_Bank)
The ECB has 3 decision-making bodies.
1) Governing Council –
- Adopt guidelines and make all decisions for the Eurosystem, including the ECB and all euro area central banks.
- Monetary policy for the euro area, including monetary objectives, key interest rates, supply of reserves in the Eurosystem and guidelines on how to implement them.
2) Executive Board –
- Prepare board meetings
- Implement monetary policy decided by the governing council. Gives instructions to euro area national central banks
- Manage day to day operations of the ECB
- Regulation based on powers delegated by the governing council
3) General Council – a transitional body to deal with issues in the adoption of the euro, and will dissolve once all the EU members have adopted the euro. Responsibilities include but not limited to:
- Advices the ECB
- Collects statistical information
- Preparation of ECB’s annual report
- Standardizing accounting and reporting of operations by national central banks
1) Governing Council
- Mario Draghi (president of ECB), Vitor Constâncio (VP of ECB), Jörg Asmussen, Benoît Cœuré, Yves Mersch, Peter Praet, Luc Coene (Gov. National Bank of Belgium), Jens Weidness (Deutsche Bundesbank), Patrick Honohan (Central Bank of Ireland), George A. Provolpoulos (Bank of Greece), Luis Marisa Linde (Governor, Banco de España), Ardo Hansson ( Governor, Eesti Pank), Christian Noyer (Governor, Banque de France), Ignazio Visco (Governor, Banca d’Italia), Panicos Demetriades (Gov, CB of Cyprus), Gaston Reinesch (Gov, Banque central du Luxumbourg), Josef Bonnici (Gov, CB of Malta), Klaas Knot (Pres, De Nederlandsche Bank), Ewald Nowotny (Gov Oesterreichische (Austrian) Nationalbank), Carlos Costa (Gov. Banco de Portugal), Marko Kranjec (Gov. Banka Slovenije), Jozef Makúch (Governor, Národná banka Slovenska), Erkki Liikanen (Gov. Suomen Pankki – Finlands Bank)
2) Executive Board:
- Mario Draghi (president of the ECB)
- Vitor Constâncio (VP of ECB)
- Jörg Asmussen
- Benoît Cœuré
- Yves Mersch
- Peter Praet
3) General Council
- Mario Draghi , Vitor Constâncio, Luc Coene, Ivan Iskrov (Gov. Bulgarian National Bank), Miroslav Singer (Gov. Czech National Bank), Lars Rohde (Danmarks Nationalbank), Jens Weidmann (Pres. Deutsche Bundesbank), Ardo Hansson (Gov. Eesti Pank), Patrick Honohan (CB of Ireland), George A. Provolpoulos (Bank of Greece), Luis Marisa Linde (Governor, Banco de España), Christian Noyer (Governor, Banque de France), Ignazio Visco (Governor, Banca d’Italia), Panicos Demetriades (Gov, CB of Cyprus), Ilmārs Rimšēvičs (Gov. Latvijas Banka), Vitas Vasiliauskas (Chairman of the board, Lietuvos bankas), Gaston Reinesch (Gov. Banque Centrale du Luxembourg), András Simor (Governor, Magyar Nemzeti Bank), ), Josef Bonnici (Gov, CB of Malta), Klaas Knot (Pres, De Nederlandsche Bank), Ewald Nowotny (Gov Oesterreichische (Austrian) Nationalbank),Marek Belka (Pres. Narodowy Bank Polski), Carlos Costa (Gov. Banco de Portugal), Mugur Isărescu (Governor, Banca Naţională a României), Marko Kranjec (Governor, Banka Slovenije), Jozef Makúch, Governor, (Národná banka Slovenska), Erkki Liikanen (Governor, Suomen Pankki – Finlands Bank), Stefan Ingves (Governor, Sveriges Riksbank), Mervyn King (Governor, Bank of England)
source: official ECB page