Econoday Report: ECB Announcement 12, 2007

2007 U.S. Economic Events & Analysis

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ECB Announcement

Definition
The European Central Bank Governing Council consists of 18 members. The Committee meets twice a month. The first monthly meeting of the month is devoted to monetary policy. Changes in monetary policy if any are announced immediately after the meetings. A press conference is held about 45 minutes after the meeting ends. A statement is read concerning their action -- or lack of it -- followed by a question and answer period. The ECB does not publish any minutes for its meetings. Why Investors Care

Released on 4/12/07

Change
Actual	0bp
Previous	25 bp

Level
Actual	3.75%

Highlights
As expected, the European Central Bank left its policy interest unchanged at 3.75 percent. While the HICP, the Bank's preferred inflation measure has fallen below the 2 percent ceiling, M3 money supply growth continues to soar leaving members of the Governing Council including Bank President Jean Claude Trichet uncomfortable. M3 was up 9.9 percent for the three months ending in February when compared with the same three months a year ago. The ECB's reference point for money supply growth is 4.5 percent. Recent economic indicators, especially for Germany, have been surprisingly strong. And evidence has piled up in recent months that the economies in other member countries are expanding as well. This was confirmed by the IMF yesterday in its semi-annual World Economic Outlook.

Trends

The ECB monitors two "pillars" of monetary policy - the harmonized index of consumer prices (HICP) and M3 money supply - in its objective to control inflation. The ceiling for HICP growth is 2 percent. M3 growth is targeted at a 4.5 percent reference growth rate. The Bank had trouble controlling both but was reluctant to increase interest rates until December 2005. In November, the flash HICP was up 3.0 percent while money supply growth expanded at a rate of 11.7 percent for the three months ending in October when compared with the same three months a year earlier. After a series of rate increases, the ECB is expected to remain on hold for at least the next several months.

Data Source: Haver Analytics

2007 Release Schedule

Released On: 1/11 2/8 3/8 4/12 5/10 6/6 7/5 8/2 9/6 10/4 11/8 12/6

Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov