Thursdays in the sun with Draghi – genxfxtrader

Thursdays in the sun with Draghi – genxfxtrader

Press conferences Mario Draghi create great expectations for their market implications of currency and monetary policy in the euro area. 

The meeting schedule this year is as follows: 


March 9, 2017 in Frankfurt 

April 27, 2017 in Frankfurt 
June 8, 2017 in Tallinn (Estonia)
July 20, 2017 in Frankfurt
September 7, 2017 in Frankfurt
October 26, 2017 in Frankfurt
14 December 2017 Frankfurt

in this thread we will follow the main headlines leaving the meeting and the views we can generate them. 


The next meeting begins in a
few hours, some expectation for today ??????


The euro has been gaining strength all morning and it
seems to just slow down, the tension is chewed.


Yesterday marked one
year since the release of monetary policy rates to 0% and Draghi has taken its most positive to send a message of optimism about the effectiveness of policies launched vein.

It supported by the rebound in growth and inflation in the EU Draghi faces two European sides claiming to current policy (Germany) and those who support its maintenance for a period (Italy), to sustain its economy. 


The
decision (Solomonic) has been to do nothing, which may have the sense to wait what will be the strategy of the Fed at its meeting next week and then decide the way forward in Europe, looking askance at the result elections in Holland this weekend.  

Perhaps the
biggest news was the change of use of the phrase that was common in his last communications as a message of reassurance to the market “all available instruments will be used”. Draghi said that the emergency has passed and that the goals are becoming closer, but clarifies that still some way to win the battle against inflation. 

Markets have taken
positively these words, example is the rise of the euro 0.36% against the dollar in yesterday’s session and continued the trend today. 

The following link can find their
press conference   and the other the summary of the outcome of the meeting

Yanet Jellen yesterday announced the second rate hike in the
US in less than 3 months. Interest rates are now between 0.75% and 1%.


The optimism created with data from the US economy have accelerated the timing of rate hike in 2017, although precisely this hike was discounted in the market. 


More interest sucitaba the possible announcement of further increases throughout this year, hoping at least two more
this year. Its aim is to prevent overheating of the economy accelerated this for the economic policy of Donald Trump, let them be forced to a rapid rise in interest rates. 


The plan is to
place the Fed rate at 3% for 2019. 


The news was taken with optimism in the markets closed higher yesterday and today continue this trend. 


The Central Bank of China has just announced the
third increase in interest rates this year. 

On this occasion announced that the increase will be
10 basis points , which falls within the strategy of China to combat both public debt and private, as a priority this year, which must be confirmed at the next congress of the Communist Party in October. 

Today May 11 at 10 am the ECB published its monthly report is once again on the interests of the market, macroeconomic prospects, etc …


Let ‘s
see a brief summary of the points that define the main points of the document:



Source:
ECB

the European Central Bank left unchanged its aggressive policy stimulus on Thursday, but closed the door to further cuts in interest rates because inflation remained below its target despite accelerating economic growth.


The institution has removed the statement after its meeting today mentioning that interest rates could be even lower.
It merely states that it has decided to keep the current level for a long period of time


In today’s meeting, the Governing Council of the ECB took the following monetary policy decisions:


1) Interest rates applicable to the main refinancing
operations financing, marginal lending and deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively the. The Governing Council continues to expect that official interest rates the ECB will remain at current levels for an extended period far exceed the horizon of its net asset purchases.


2) In relation to measures of unconventional monetary policy, purchases under the program of asset purchases I continue at the
current rate of 60 mm per month euros until the end of December 2017. From January 2018 is expected net purchases continue at a monthly rate of EUR 30 billion until the end of September 2018, or until a later date if necessary and in any case, until the Governing Council observe a sustained adjustment path inflation that is consistent with its inflation target. If the prospects were less favorable, or if financial conditions were incompatible with the progress of sustained adjustment path of inflation, the Governing Council plans to expand the volume and / or duration of this program.


3) During an extended period after the end of their net purchases of assets and, in any case, as long as necessary, the Eurosystem will
reinvest the principal of the securities purchased under this program fall due. This will contribute to a favorable liquidity conditions and an appropriate stance of monetary policy.


4) The main refinancing operations and refinancing operations longer than three months term will continue to
run through tender procedures fixed rate with full allotment as long as necessary, and at least until the end of the last period reserve maintenance 2019.

Press Release

at its meeting today, the
Governing Council of the ECB decided that the interest rates on the main refinancing operations, the marginal lending facility and the deposit facility will remain unchanged at 0 , 00%, 0.25% and -0.40% respectively the.

The Governing Council expects the official interest rates of the ECB remain at current levels for an extended period far exceed the horizon of its net asset purchases.


Regarding measures unconventional monetary policy, the Governing Council confirms that it
expects net asset purchases, the new rate of 30 mm per month, will continue until the end of September 2018 or until a later date if necessary and, in any case, until the Governing Council observe a sustained inflation path consistent with its inflation target setting.


If the prospects were less favorable, or if financial conditions were incompatible with the progress of sustained adjustment path of inflation, the Governing Council is ready to expand the volume and / or duration of the program of asset purchases.


The Eurosystem will
reinvest the principal of the securities purchased under this program fall due, over an extended period after the end of their net purchases of assets and, in any case, for as long as necessary. This will contribute to liquidity conditions are favorable and the stance of monetary policy is appropriate.

Mario Draghi speech

Ladies and gentlemen, first of all let me wish you a Happy New Year.
The Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council, Which was Attended by the Commission Also Vice-President, Mr Dombrovskis.


Based on our Regular economic and monetary analyzes, we Decided to keep the
 key ECB interest rates  unchanged. We continue to expect them to REMAIN at Their present levels for an extended period of time, and well past the horizon of our net asset purchases.

Regarding 
non-standard monetary policy Measures , we confirm That our net asset purchases, at the new monthly pace of € 30 billion, are Intended to run Until the end of September 2018, or beyond, IF NECESSARY, and in any case Until the Governing Council Sees a sustained adjustment in the path of inflation consistent inflation with its aim. If the outlook Becomes less Favorable, or if financial conditions Become Inconsistent With further progress towards a sustained adjustment in the path of inflation, we stand ready to Increase the Asset Purchase Program (APP) in terms of size and / or duration. The Eurosystem will reinvest the principal payments from maturing securities Purchased under the APP for an extended period of time after the end of Its net asset purchases, and in any case for as long as Necessary. This will Contribute to Both Favorable conditions and liquidity to an Appropriate monetary policy stance.

Incoming information confirms a robust pace of economic expansion, Which accelerated more than expected in the second half of 2017. The strong cyclical momentum, the ongoing reduction of economic slack and increase increasing capacity utilization Strengthen our confidence further inflation will converge towards That our aim of inflation below, but close to, 2%.
At the same time, domestic price pressures muted overall and REMAIN Have yet to show convincing signs of a sustained upward trend. Against esta background, the recent volatility in the exchange rate Represents a source of uncertainty Which requires monitoring With regard to STI possible Implications for the medium-term outlook for price stability. Overall, an ample degree of monetary stimulus remains Necessary for underlying inflation pressures continue to build up and support to headline inflation over the medium term Developments. This continued monetary support is provided by the net asset purchases, by the sizeable stock of acquired assets and the forthcoming reinvestments, and by our forward guidance on interest rates.


Let me now Explain our assessment in greater detail, starting with the 
economic analysis . Real GDP Increased by 0.7%, quarter on quarter, in the third quarter of 2017, following a similar growth in the second quarter. The latest economic data and survey results continued strong Indicate and broad-based growth momentum at the turn of the year. Our monetary policy Measures, Which Have Facilitated the deleveraging process, continue to underpin domestic demand. Private consumption is supported by rising employment, Which is Also benefiting from past Labor Market Reforms, and by growing household wealth. Continues to Strengthen Business investment on the back of very Favorable financing conditions, rising corporate profitability and solid demand. Housing investment has improved further over recent quarters. In Addition, the broad-based Global expansion is providing impetus to euro area exports.

The Risks surrounding the euro area growth outlook are broadly balanced as Assessed.
On the one hand, the prevailing strong cyclical momentum Could lead to further positive growth surprises in the near term. On the other hand, continue to relate Downside Risks to Global Primarily factors, Including Developments in foreign exchange markets.


Euro area annual inflation was 1.4% PICH in December 2017, down from 1.5% in November.
This Reflected mainly in energy prices Developments. Looking ahead, on the basis of current futures prices for oil, annual rates of inflation are likely to headline hover around current levels in the coming months. For Their part, Measures of underlying inflation subdued REMAIN – in part owe owing to special factors – and Have yet to show convincing signs of a sustained upward trend. Yet, looking forward, they are expected to rise They Gradually over the medium term, supported by our monetary policy Measures, the Continuing economic expansion, the absorption of economic slack Corresponding and rising wage growth.


Turning to the 
monetary analysis , broad money (M3) Continues to expand at a robust pace, with an annual rate of growth of 4.9% in November 2017, after 5.0% in October, reflecting the impact of the ECB’s monetary policy Measures and the low opportunity cost of holding The most liquid deposits. Accordingly, the narrow monetary aggregate M1 continued to be the main contributor to broad money growth, expanding at an annual rate of 9.1% in November, after 9.4% in October.

The recovery in the growth of loans to the private sector ,
since the beginning of Observed 2014 is proceeding. The annual growth rate of loans to non-financial corporations to 3.1% Increased in November 2017, after 2.9% in October, while the annual growth rate of loans to 2.8% Households stood at in November, 2.7% in Compared With October. The euro area bank lending survey for the fourth quarter of 2017 loan growth Indicates That Continues to be supported by Increasing demand and a further easing in overall lending conditions.


The pass-through of the monetary policy Measures put in place since June 2014 Continues to support Significantly borrowing conditions for firms and Households, access to financing – notably for small and medium-sized enterprises – and credit flows across the euro area.


To sum up, a 
cross-check  of the outcome of the economic analysis With the signals coming from the monetary analysis confirmed the need for an ample degree of monetary accommodation to secure a sustained return of inflation rates towards levels That are below, but close to , 2%.

In order to reap the full benefits from our monetary policy Measures, other policy areas must Contribute to decisively longer-term Strengthening the growth potential and reducing vulnerabilities.
The implementation of 
Structural Reforms  in euro area country clubs needs to be stepped up to Substantially Increase resilience, reduce structural unemployment and boost euro area productivity and growth potential. Regarding  tax policies , the increasingly solid and broad-based expansion Strengthens the case for tax rebuilding buffers. This is good role in Countries Where government debt remains high. All countries would benefit from Intensifying Efforts Towards Achieving a more growth-friendly public finances of composition. A full, transparent and consistent implementation of the Stability and Growth Pact and of the macroeconomic imbalance procedure over time and across country clubs remains essential to Increase the resilience of the euro area economy. Strengthening Economic and Monetary Union remains a priority. The Governing Council Welcomes the ongoing discussions on completing the Banking Union and the Union capital markets, and on further deepening Economic and Monetary Union.

Central Bank recently launched a campaign to send questions to Mario Draghi their opinions on various topics: 


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