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Resource Center » U.S. & International Recaps | Release Dates | Why Investors Care | Today's Calendar
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ECB Announcement
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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
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| Released on
8/2/07
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Highlights
As expected, the European Central Bank left its policy interest rate at 4 percent after increasing it to that level in June. While the harmonized index of consumer prices has remained just below the inflation target of 2 percent, M3 money supply growth has consistently been above the reference target of 4.5 percent. M3 growth soared by 10.6 percent for the three months ending in June when compared with the same three months a year earlier. Recent economic indicators for the eurozone continue to be strong with unemployment continuing to decline.
Usually the Bank does not hold a press conference in August. (It held one last year when it raised its benchmark rate to 3 percent. Then, reporters and investors were informed a month earlier that a briefing was planned.) But in a surprise announcement, the Bank said Thursday that President Jean Claude Trichet would hold a press briefing to announce the outcome of today's Governing Council meeting. The unusual feature is that the press briefing will be conducted as a media lock-up, with an embargo for all media set until 15 minutes after the end of the press briefing.
In his hastily called news conference, Trichet said that the ECB must adopt a stance of "strong vigilance" to ensure that inflation risks do not materialize in the EMU. This was immediately interpreted to mean that the Governing Council would increase its interest rate at its September meeting. This is the language he has used to signal each of the preceding eight rate increases since late 2005.
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Trends
![[Chart]](chart.gif)
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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
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