The Strategist

Highlights of ECB's Press Conference: Draghi is Attacked by Girl in Black; Benchmark Interest Rate is Record Low

04/15/2015 - 17:20

The European Central Bank’s head Mario Draghi press conference was suddenly interrupted by an activists attack. A girl climbed on Draghi’s table and shouted slogans against the ECB. Remy Steinegger Remy Steinegger
The incident took place in Frankfurt am Main. Only a few minutes passed since the beginning of Draghi’s press conference on Wednesday, when an activist in the black t-shirt jumped on the chairman of the ECB’s board. She scattered the confetti on the table shouting slogans like "against the dictatorship of the ECB", and then was caught by guards.

Draghi’s press conference webcast was interrupted by this incident yet resumed a few minutes later. The ECB’s head joked he is happy that sheets of paper with the speech, on which activist walked, were found without a scratch.

The culprit’s identity is being investigated, but Western media speculated that she could have arrived from Greece. ECB’s policy displeases some activists in Europe - in March, left-wing radicals staged a mass demonstrations at the opening of the new European Central Bank headquarter in Frankfurt and were broken up with tear gas.

ECB Governing Council meeting was continued after the girl’s attack, and there was decided to keep the benchmark interest rate at 0.05%, which is record low. Earlier, analysts assumed that the rate will not be changed in the near future. The European Central Bank also intends to fully implement the program of buying government bonds worth 1 trillion euros, although the economic recovery in the euro zone is expected to expand and strengthen.

In March, the ECB started to implement a program of buying assets, which should last until September 2016, allocating 60 billion euros this month.

Mario Draghi dismissed speculation of market participants that recently received evidence of economic recovery of the euro area may force the ECB to cut the QE program.

- Our focus will be centered on the our policy measures full implementation - said Draghi at the press conference after the Central Bank’s meeting.
- The purchase should last until September 2016, and, in any case, until we see significant changes in inflation’s trajectory, which will coincide with our aim to achieve the inflation rate of just below 2 percent over the medium term.

According to the latest estimates, inflation in the euro zone is minus 0.1 percent.

Draghi said he was surprised by rumors of a premature termination of the program, which started just a month ago.

Today, the ECB left interest rates at record lows, as the scheme of buying bonds apparently invigorates Eurozone economy.

Home refinancing rate, which determines the cost of credit, is 0.05 percent and the deposit rate is minus 0.2 percent.

Aid to Greece

Draghi said that the help to cash-strapped Greece is definitely depends on the Greek government, which has not yet established a program of economic reform acceptable to its creditors.

ECB regulators expanded the amount of financial aid to Greece up to 74 billion euros, said the bank source in Tuesday.

- We have approved a bailout, and we will continue to do it, that is, to provide liquidity to Greek banks as they are solvent and have adequate collateral, - said Draghi.

The time when Athens can improve its program of reforms needed to get Eurozone’s loans and stay afloat, is coming to an end.

If Greece eventually abandon the euro, it will hit the reputation of monetary union.

Now the Central Bank’s scheme of money issue aimed at buying up assets supports confidence in the block.

- We will contribute to the further improvement of the economic forecast, the reduction of economic weakness and recovery of growth of money and credit through these measures - believes Draghi.
- We expect that the economic recovery will gradually expand and grow stronger.

The program of quantitative easing has already caused the bonds value growth, and investors are wondering whether they affordable for the ECB to buy top-rated countries’ papers such as German.

Draghi said that the market has enough bonds to buy.
- We do not see any problems. Our program is flexible enough to adjust, if necessary, if circumstances change."

He added that it is too early to talk about the ECB monetary policy changes timing, and the regulator will assess the qualitative performance of many indicators before making such a decision.

ECB meeting was held a day earlier than usual to Draghi could join the Big Twenty’s finance ministers and central bankers at the Spring Forum of the International Monetary Fund in Washington.

On Tuesday, the IMF raised its economic growth forecast for all major economies of the currency bloc.

source: Reuters

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