Mario Draghi of European Central Bank Faces a Monetary-Policy Tightrope

Analysts will be deconstructing Mr. Draghi’s opening statement, which will have the Governing Council’s endorsement, for any subtle changes in guidance.

But Mr. Draghi will probably avoid sending strong signals one way or another. Although the eurozone is in the midst of a broad economic upswing, trouble spots remain, notably Italy.

The European Central Bank is expected to wait until its next monetary policy meeting, in September, to provide clear signals about how quickly it will reduce its purchases. Until then Mr. Draghi will try to keep the bank’s options open.

The difficulty he faces is that even subtle changes in tone or language can ripple through financial markets. Last month, bond markets gyrated for several days based on a few lines in a speech that Mr. Draghi gave in Portugal.

“The central bank can accompany the recovery by adjusting the parameters of its policy instruments,” he said, in part.

On one hand, Mr. Draghi seemed to be stating the obvious. But among traders and investors, the statement crystallized expectations that the end of quantitative easing was near.

The value of the euro compared to the dollar has been on an upward trend ever since, an unwelcome development from the central bank’s perspective because a stronger euro makes products manufactured in the eurozone more expensive for foreign buyers.

Mr. Draghi does not want his words to throttle the region’s recovery. That is why the news conference will be such a high-wire act.

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