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You can find the current article at its original source at http://www.theguardian.com/business/live/2015/sep/03/markets-european-central-bank-mario-draghi-inflation-live
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| Version 20 | Version 21 |
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| ECB press conference: Markets jump as Draghi hints at more QE - as it happened | ECB press conference: Markets jump as Draghi hints at more QE - as it happened |
| (12 days later) | |
| 5.30pm BST | 5.30pm BST |
| 17:30 | 17:30 |
| Draghi rally sends shares up, euro down | Draghi rally sends shares up, euro down |
| Europe’s stock markets have just shut for the day, with big gains across the board as investors anticipate more stimulus measure from the ECB. | Europe’s stock markets have just shut for the day, with big gains across the board as investors anticipate more stimulus measure from the ECB. |
| The FTSE 100 closed up 110 points, or 1.8%, at 6194 - further away from the losses suffered a week ago. | The FTSE 100 closed up 110 points, or 1.8%, at 6194 - further away from the losses suffered a week ago. |
| All the main indices jumped, as Mario Draghi’s warnings of lower growth and weaker inflation triggered expectations of more bond-buying from Europe’s central bank. | All the main indices jumped, as Mario Draghi’s warnings of lower growth and weaker inflation triggered expectations of more bond-buying from Europe’s central bank. |
| Marchel Alexandrovich of Jefferies, the investment bank, says Draghi gave a clear signal that he would act if needed: | Marchel Alexandrovich of Jefferies, the investment bank, says Draghi gave a clear signal that he would act if needed: |
| Facing a deterioration in the external environment, the ECB nudged down its economic forecasts and opened the door for potentially increasing the scale of the QE programme. All-in-all, the changes to its macroeconomic forecasts were fairly marginal; but to put things into perspective, this is a first downgrade to the euro area’s prospects since last December, so the changes may be small, but they are symbolically important...... | Facing a deterioration in the external environment, the ECB nudged down its economic forecasts and opened the door for potentially increasing the scale of the QE programme. All-in-all, the changes to its macroeconomic forecasts were fairly marginal; but to put things into perspective, this is a first downgrade to the euro area’s prospects since last December, so the changes may be small, but they are symbolically important...... |
| As in March and in June, the ECB is on the record stating that it is prepared to ease policy if data does not meet expectations. At a time of heightened global uncertainty, even such a simple message is a good start. | As in March and in June, the ECB is on the record stating that it is prepared to ease policy if data does not meet expectations. At a time of heightened global uncertainty, even such a simple message is a good start. |
| And that has left the euro sharply down tonight; it has shed more than one cent against the US dollar to languish around $1.1107 | And that has left the euro sharply down tonight; it has shed more than one cent against the US dollar to languish around $1.1107 |
| For a full summary, check out the key points from Draghi’s press conference. | For a full summary, check out the key points from Draghi’s press conference. |
| I’ll be back tomorrow, when we get the latest US jobs data. Goodnight. GW | I’ll be back tomorrow, when we get the latest US jobs data. Goodnight. GW |
| Updated | Updated |
| at 5.34pm BST | at 5.34pm BST |
| 4.48pm BST | 4.48pm BST |
| 16:48 | 16:48 |
| Investec have sent over a handy explanation of the tweaks that the ECB is making to its asset purchase plan (announced early in today’s press conference): | Investec have sent over a handy explanation of the tweaks that the ECB is making to its asset purchase plan (announced early in today’s press conference): |
| The change will see the Public Sector Purchase Programme issue share limit raised from 25% to 33%, except where the Eurosystem would have a blocking minority. | The change will see the Public Sector Purchase Programme issue share limit raised from 25% to 33%, except where the Eurosystem would have a blocking minority. |
| This change appears to be aimed at reinforcing views that the ECB maintained full control over its purchases and could work easily around market impediments; indeed Mr Draghi said it was meant to ensure the continued smooth functioning of the programme. | This change appears to be aimed at reinforcing views that the ECB maintained full control over its purchases and could work easily around market impediments; indeed Mr Draghi said it was meant to ensure the continued smooth functioning of the programme. |
| We note that Germany in particular could have found itself running up against the 25% limit, so the adjustment today should support the ECB, for example, in buying its full allocation for Germany. | We note that Germany in particular could have found itself running up against the 25% limit, so the adjustment today should support the ECB, for example, in buying its full allocation for Germany. |
| 4.21pm BST | 4.21pm BST |
| 16:21 | 16:21 |
| Ranko Berich, Head of Market Analysis at Monex Europe, reckons the European Central Bank will set sail on QE2 soon, following today’s “unambiguously dovish” press conference: | Ranko Berich, Head of Market Analysis at Monex Europe, reckons the European Central Bank will set sail on QE2 soon, following today’s “unambiguously dovish” press conference: |
| “Draghi presented a double-whammy of pessimism, with additional downside risks from recent market volatility adding to the already downgraded growth and inflation forecasts.” | “Draghi presented a double-whammy of pessimism, with additional downside risks from recent market volatility adding to the already downgraded growth and inflation forecasts.” |
| Should we see the very real risks of free-falling commodity prices and a weakened growth outlook begin to weigh down on inflation prospects, Draghi has shown his intention to act by altering the duration, composition, or size of QE. | Should we see the very real risks of free-falling commodity prices and a weakened growth outlook begin to weigh down on inflation prospects, Draghi has shown his intention to act by altering the duration, composition, or size of QE. |
| Unless some upside price pressure materialises, the ECB will be forced to follow the Fed and Bank of Japan in a second QE programme.” | Unless some upside price pressure materialises, the ECB will be forced to follow the Fed and Bank of Japan in a second QE programme.” |
| 4.07pm BST | 4.07pm BST |
| 16:07 | 16:07 |
| Enrique Diaz Alvarez, Chief Risk Officer and Currency Expert at Ebury, predicts that the euro will continue to weaken in the months ahead. | Enrique Diaz Alvarez, Chief Risk Officer and Currency Expert at Ebury, predicts that the euro will continue to weaken in the months ahead. |
| Here’s why: | Here’s why: |
| “The ECB is committed to easier monetary policy, and today’s press conference has reaffirmed that this commitment explicitly includes a lower euro. | “The ECB is committed to easier monetary policy, and today’s press conference has reaffirmed that this commitment explicitly includes a lower euro. |
| “While there were no changes to the ECB policy stance, President Draghi sent the Euro sharply lower right at the start of the press conference with comments and projections that were extremely dovish. | “While there were no changes to the ECB policy stance, President Draghi sent the Euro sharply lower right at the start of the press conference with comments and projections that were extremely dovish. |
| “He specifically mentioned a weaker Euro as a key lever to the European economic recovery. Inflation and growth forecasts were also slashed, with Draghi suggesting that we may see negative inflation again soon. | “He specifically mentioned a weaker Euro as a key lever to the European economic recovery. Inflation and growth forecasts were also slashed, with Draghi suggesting that we may see negative inflation again soon. |
| “In light of this, our view is that the common currency will resume a gently depreciating path against most other major currencies over the coming months, particularly against the US dollar.” | “In light of this, our view is that the common currency will resume a gently depreciating path against most other major currencies over the coming months, particularly against the US dollar.” |
| 3.55pm BST | 3.55pm BST |
| 15:55 | 15:55 |
| 3.45pm BST | 3.45pm BST |
| 15:45 | 15:45 |
| Mario Draghi’s ability to move the markets without actually doing anything has left Marc Ostwald of ADM Investor Services shaking his head in admiration. | Mario Draghi’s ability to move the markets without actually doing anything has left Marc Ostwald of ADM Investor Services shaking his head in admiration. |
| The sleight of hand in terms of a renewed dose of ‘all talk and no action’ was once again masterful, above all in emphasizing the ECB’s dovishness and hefty easing bias. | The sleight of hand in terms of a renewed dose of ‘all talk and no action’ was once again masterful, above all in emphasizing the ECB’s dovishness and hefty easing bias. |
| However, the ECB hasn’t actually discussed extending QE today, Ostwald points out. | However, the ECB hasn’t actually discussed extending QE today, Ostwald points out. |
| 3.41pm BST | 3.41pm BST |
| 15:41 | 15:41 |
| ABN Amro: More QE coming | ABN Amro: More QE coming |
| ECB president Mario Draghi gave a clear signal that additional monetary easing is likely in the coming months, says Nick Kounis of ABN Amro. | ECB president Mario Draghi gave a clear signal that additional monetary easing is likely in the coming months, says Nick Kounis of ABN Amro. |
| Here’s his early take: | Here’s his early take: |
| The ECB lowered its 2017 inflation forecast as well as now seeing downside risks to these forecasts. At 1.7%, the new medium term forecast is already arguably below its price stability goal, while developments since that forecast was made, suggest it could be downgraded further. | The ECB lowered its 2017 inflation forecast as well as now seeing downside risks to these forecasts. At 1.7%, the new medium term forecast is already arguably below its price stability goal, while developments since that forecast was made, suggest it could be downgraded further. |
| We therefore now think that the ECB will like step up its QE programmes going forward. This will likely mean an increase in the monthly purchase amount as well as an expansion of the pool of eligible assets. | We therefore now think that the ECB will like step up its QE programmes going forward. This will likely mean an increase in the monthly purchase amount as well as an expansion of the pool of eligible assets. |
| 3.39pm BST | 3.39pm BST |
| 15:39 | 15:39 |
| Wall Street has also welcomed Mario Draghi’s pledge to take more stimulus measure if needed. | Wall Street has also welcomed Mario Draghi’s pledge to take more stimulus measure if needed. |
| The Dow Jones industrial average, and the broader S&P 500, are both up by almost 1%. | The Dow Jones industrial average, and the broader S&P 500, are both up by almost 1%. |
| S&P rips higher... +21 handles #ThankYouDraghi | S&P rips higher... +21 handles #ThankYouDraghi |
| 3.23pm BST | 3.23pm BST |
| 15:23 | 15:23 |
| Draghi's press conference: the key points | Draghi's press conference: the key points |
| We won’t call it a vintage performance from Mario Draghi, as that might sound agist on his birthday. | We won’t call it a vintage performance from Mario Draghi, as that might sound agist on his birthday. |
| But it was a timely reminder that the ECB president can move the markets like the best of them, as European shares rise and the euro takes a bath. | But it was a timely reminder that the ECB president can move the markets like the best of them, as European shares rise and the euro takes a bath. |
| Here’s a quick summary | Here’s a quick summary |
| 1) The ECB is gloomy, and getting gloomier. | 1) The ECB is gloomy, and getting gloomier. |
| As feared, the ECB has cut its forecasts for growth and inflation over the next few years, admitting that inflation will still be below target by 2017 (see details here) | As feared, the ECB has cut its forecasts for growth and inflation over the next few years, admitting that inflation will still be below target by 2017 (see details here) |
| As Draghi put it: | As Draghi put it: |
| Overall, we expect the economic recovery to continue, albeit at a somewhat weaker pace than earlier expected, reflecting in particular the slowdown in emerging market economies, which is weighing on global growth and foreign demand for euro area exports | Overall, we expect the economic recovery to continue, albeit at a somewhat weaker pace than earlier expected, reflecting in particular the slowdown in emerging market economies, which is weighing on global growth and foreign demand for euro area exports |
| But the big worry is that these forecasts don’t take into account the turmoil which gripped the markets in the last three weeks, rippling out from China. | But the big worry is that these forecasts don’t take into account the turmoil which gripped the markets in the last three weeks, rippling out from China. |
| 2) The ECB may be forced to extend its stimulus programme again. | 2) The ECB may be forced to extend its stimulus programme again. |
| In Draghi’s words: | In Draghi’s words: |
| [the governing council] emphasises its willingness and ability to act, if warranted, by using all the instruments available within its mandate and, in particular, recalls that the asset purchase programme provides sufficient flexibility in terms of adjusting the size, composition and duration of the programme. | [the governing council] emphasises its willingness and ability to act, if warranted, by using all the instruments available within its mandate and, in particular, recalls that the asset purchase programme provides sufficient flexibility in terms of adjusting the size, composition and duration of the programme. |
| That means it could buy more than €60bn of assets per month, or keep buying beyond the current cut-off target in a year’s time. | That means it could buy more than €60bn of assets per month, or keep buying beyond the current cut-off target in a year’s time. |
| 3) The markets smell more cheap money. | 3) The markets smell more cheap money. |
| Nearly seven years after the collapse of Lehman Brothers, the financial world is still driven by central banks. Europe’s stock markets are romping ahead, led by Germany’s DAX: | Nearly seven years after the collapse of Lehman Brothers, the financial world is still driven by central banks. Europe’s stock markets are romping ahead, led by Germany’s DAX: |
| 4) Draghi is worried about China’s slowdown. | 4) Draghi is worried about China’s slowdown. |
| China will be a key issue at the G20 meeting this weekend, with the ECB concerned that the slowdown in the country’s economy is going to cause serious problems. | China will be a key issue at the G20 meeting this weekend, with the ECB concerned that the slowdown in the country’s economy is going to cause serious problems. |
| He said: | He said: |
| We are observing a weakening of the prospects of the Chinese economy. This has two effects substantially: one is through the trade channel, weakening the economies of the rest of the world... and the confidence effect on the stock market and all the other financial markets, which is also operating on the negative side. | We are observing a weakening of the prospects of the Chinese economy. This has two effects substantially: one is through the trade channel, weakening the economies of the rest of the world... and the confidence effect on the stock market and all the other financial markets, which is also operating on the negative side. |
| 5) Greece must do its homework | 5) Greece must do its homework |
| The Greek debt crisis got less attention than usual, now that the bailout deal has been agreed. But Athens must do more to satisfy the ECB before it will agree to include Greek bonds in its QE programme: | The Greek debt crisis got less attention than usual, now that the bailout deal has been agreed. But Athens must do more to satisfy the ECB before it will agree to include Greek bonds in its QE programme: |
| First, Greece must be in a program for financial assistance, it must comply with it, and must then show “strong ownership and consistent and significant implementation”. | First, Greece must be in a program for financial assistance, it must comply with it, and must then show “strong ownership and consistent and significant implementation”. |
| There will be some milestones that will be judged and assessed in the weeks ahead and based on that assessment the Governing Council will take a decision. | There will be some milestones that will be judged and assessed in the weeks ahead and based on that assessment the Governing Council will take a decision. |
| 2.37pm BST | 2.37pm BST |
| 14:37 | 14:37 |
| A slice of birthday cake for CNBC’s Carolin Roth, who wishes Draghi a happy birthday. | A slice of birthday cake for CNBC’s Carolin Roth, who wishes Draghi a happy birthday. |
| Draghi press conference ends on 'happy birthday note' (just a wish not a song). | Draghi press conference ends on 'happy birthday note' (just a wish not a song). |
| She also gets Draghi to talk about China -- he explains that the slowdown of the Chinese economy will have an impact on trade channels across the globe. | She also gets Draghi to talk about China -- he explains that the slowdown of the Chinese economy will have an impact on trade channels across the globe. |
| He’ll be pushing Chinese officials for answers at the G20 meeting this weekend. | He’ll be pushing Chinese officials for answers at the G20 meeting this weekend. |
| And that’s the end of the press conference. I’ll pull together a summary and some instant reaction now. | And that’s the end of the press conference. I’ll pull together a summary and some instant reaction now. |