The European Central Bank procrastinate – The World

Even when he has promised nothing, the markets are still hoping it offers them something. Mario Draghi, the president of the European Central Bank (ECB), has once again delivered a delicate balancing act, Thursday, June 2, at the end of the institution’s meeting. No major decisions have been taken, if not the announcement of the early redemption of private debts, set at June 8

For the rest, the challenge of the Italian was not hold any word likely to anxious investors prone to panic at the thought of seeing the monetary tap dry up. Challenge raised: in a few words, “he Dottore” Draghi managed to gain time, and this on three key topics

Admission of failure

. inflation, first. Despite the rise in oil prices, the institution is moderately revised upwards its forecast on the matter. She said prices should climb 0.2% in 2016 in the euro area, against 0.1% previously estimated. 2017 (1.3%) and 2018 (1.6%), forecasts remain unchanged. Inflation is not close to reaching the 2% target that has set the ECB. Skeptics see it as an admission of failure

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The other, starting with European central bankers, recalls that non-oil inflation really bounce when wages finally ressaisiront in the eurozone. It is not the responsibility of the ECB. Meanwhile, it does everything it can to support the other components of the price index.

Mario Draghi finally hoped that the UK remains within the European Union

Mario Draghi has also delayed on Greece. Unlike Athens hoped for, it did not reopen the tap financing at low cost from the ECB to Greek banks. Since February 2015, the ECB refuses indeed to accept Greek government bonds, which it considers bad, as collateral in loan exchange liquidity to banks. She did resume only if Greece really implements pre reforms demanded by creditors. By then, the country’s banks still have a second emergency liquidity to tap from the central bank (the “ELA”). But it costs them more expensive …

Mario Draghi finally hoped that the UK remains in the EU. But he also said his institution is adorned in case of “Brexit”. This will reassure the markets? In the short term only. For the next few weeks, the subject will be at the heart of the concerns of the economic world. The Bank of England is already preparing measures in the event that it should provide additional liquidity to banks. If financial panic spread, the ECB would probably do the same.

Meanwhile, Janet Yellen, president of the Federal Reserve, is in limbo. In theory, its objective is to continue the rise in US interest rates. But the next Fed meeting will be held on 14 and 15 June, just before the British referendum of June 23 She will take the risk of stirring up trouble in the markets before such a major political event? Probably not. Like its European counterpart, M ^me Yellen is in effect convinced of one thing: monetary, caution is the mother of safety …

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