Draghi’s Press Conference

Streaming live now on the ECB website.

Press conference over.  Introductory statement available here.

Bottom line:  no interest rate change, but ECB will continue LTRO and MRO through at least the end of 2012.

Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. While inflation rates are likely to stay above 2% for the remainder of 2012, over the policy-relevant horizon we expect price developments to remain in line with price stability. Consistent with this picture, the underlying pace of monetary expansion remains subdued. Inflation expectations for the euro area economy continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. At the same time, economic growth in the euro area remains weak, with heightened uncertainty weighing on confidence and sentiment, giving rise to increased downside risks to the economic outlook.

In previous months we have implemented both standard and non-standard monetary policy measures. This combination of measures has supported the transmission of our monetary policy. Today, we have decided to continue conducting our main refinancing operations (MROs) as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the 12th maintenance period of 2012 on 15 January 2013. This procedure will also remain in use for the Eurosystem’s special-term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as needed. The fixed rate in these special-term refinancing operations will be the same as the MRO rate prevailing at the time. Furthermore, the Governing Council has decided to conduct the three-month longer-term refinancing operations (LTROs) to be allotted until the end of 2012 as fixed rate tender procedures with full allotment. The rates in these three-month operations will be fixed at the average rate of the MROs over the life of the respective LTRO. Keeping in mind that all our non-standard monetary policy measures are temporary in nature, we will monitor further developments closely and ensure medium-term price stability for the euro area by acting in a firm and timely manner.


Lower rates were hoped for, but not expected.  LTRO was necessary and delivered right on schedule — sparking a nice rally.


Draghi’s Press Conference — 7 Comments

  1.  Hello PW, last week, you mentioned that you’ll have to say goodbye the analog (March 2011 vs May 2012), because SPX dropped below 1291 last week.

    However, SPX is now on track to recover.  Yesterday with the “good” news from Europe (although without much substance).  This morning, there was Chinese rate reduction.  And BB is going to say something to simulate the “economy” (aka stock market).   (Still, no offense, why would the world still listen to BB and assume that he will fix everything.) 

    In addition, you took the courage to forecast a 40% increase in XLF in July.

    From all these, it seems like the analog is on track to create a new high in July.  So, the analog seems to be valid?  (March 2011 drop and then a new high in May 2011 vs May 2012 drop and then a new high in July 2012.)

    • We may or may not make a new high in July, but it won’t likely be the result of the analog.  Price action has simply gone too far afield from the 2011 pattern.

  2. Nice A/1 wave up.  It will sort itself out quickly with a B (meandering and tricky) vs. a 2 wave (sharp and quick) before C/3 pushes higher than today’s 1310 level.  I was so levered up on the long side, I’ve got no buying power after taking profits at 1308.75 earlier today, but that opened up some extra room to trade now.

    Nice work Pebble.  Love the site and your insights.

    • Meandering and tricky seem to be the watchwords for the market lately.  Glad you’re enjoying the site and making some money, too.  Spread the word.  The more members we have, the more time I can devote to blogging instead of trading.

  3. Nice work PW. I am very much enjoying my subscription. Thank you for being here helping me.