Mario Draghi has said he will keep pumping money into the economy, doing his best to keep markets happy amid reports that the eurozone recovery is turning a corner. But it was a protester that ended up stealing the show.
The European Central Bank (ECB) will forge ahead with its controversial bond-buying scheme, president Mario Draghi announced at a Wednesday news conference in Frankfurt, expressing surprise at speculation of an early end to the bank’s quantitative easing (QE) policy.
“Our focus will be on the full implementation of our monetary policy measures,” the ECB chief said, stressing his resolve to stay the course until the 60-billion euro ($63.6-billion) a month money-printing program is set to expire in September 2016, at a total cost of 1.1 trillion euros.
Draghi said that the 25-member governing council decision to keep the benchmark refinancing rate, known as “refi,” at its current all-time low of 0.05 percent, reflected “clear evidence” that the central bank’s aggressive monetary policy were “effective.” The ECB will also leave untouched the two other key deposit and marginal lending rates, currently pegged at -0.2 percent and 0.3 percent, respectively.
“Through these measures we will contribute to a further improvement in the economic outlook,” Draghi predicted, pointing to data showing the threat of deflation on the retreat.
“Financial market conditions and the cost of external finance for the private sector have eased considerably over the past months and borrowing conditions for firms and households have improved notably, with a pick-up in the demand for credit.”
On Tuesday, the International Monetary Fund revised up its growth forecast for the eurozone to 1.5 percent this year, followed by 1.6 percent in 2016.
The eurozone’s top financial shepherd has repeatedly signalled that he won’t scale back QE until consumer prices return to the bank’s inflation goal of below, but close to, 2 percent.
“I’m quite surprised, frankly, by the attention a possible early exit of the program is receiving, when we’ve been in the program only a month,” Draghi said, comparing it to asking a marathon runner “is it over yet?” after just one kilometer.
No olive branch, but much confetti
Debate about the eurozone economy invariably also raised questions about Greece and the increasingly likely scenario of an exit from the 19-member currency bloc.
Asked about ECB aid to Greek banks, Draghi replied, “the answer to your question is entirely in the hands of the Greek government and the negotiations between Athens and its eurozone partners.” He added that the question of debt restructuring for Greece had been raised at the meeting of the governing council, but only said that it would “come back to this issue in due time.”
Overall, there was little to surprise anyone at Wednesday’s press conference, save for a brief confetti-filled intermezzo, when a member of feminist activist group FEMEN charged at Draghi, jumped on the podium and shouted “end the ECB dictatorship!”
After two men in suits carried her out of the room, Draghi picked up where he left off, albeit looking a little shaken.
“You know it’s been a dull press conference when the only real talking point to come from it is a protestor jumping on the table in front of Mario Draghi, throwing confetti on him. That was very much the case today,” Craig Erlem, analyst at Oanda, concluded.
“All things considered, as expected, today was something of a non-event from the ECB.”