Mario Draghi of European Central Bank Faces a Monetary-Policy Tightrope
The bank’s Governing Council is unlikely to change policy after its meeting on Thursday,
but Mr. Draghi will have a difficult job when he faces the media at a news conference after the meeting: to gently prepare markets for the day the central bank will begin withdrawing stimulus, without provoking an overreaction.
Financial markets have been hypersensitive in recent weeks to anything that Mr. Draghi has said about plans to wind down central bank stimulus.
press conference on Thursday will serve to show what a tightrope act the central bank now faces,"
Jörg Krämer, chief economist at Commerzbank, said in a note to investors this week.
By JACK EWINGJULY 20, 2017
FRANKFURT — The metaphor of the moment at the European Central Bank’s headquarters is "tightrope."
As in, what Mario Draghi, the bank’s president, will have to walk on Thursday.
Yet the day will soon come when the European Central Bank begins tapering its purchases of government
and corporate bonds, the so-called quantitative easing it has been using to drive down market interest rates.
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.
Any statements that change investor expectations about central bank plans can have a violent effect on bond prices and currency rates.
" he said, in part. that The central bank can accompany the recovery by adjusting the parameters of its policy instruments,
