Econoday Report: ECB Announcement 4, 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 10/4/07

Change
Actual	0bp
Previous	0 bp

Level
Actual	4.0%

Highlights
As expected, the European Central Bank left its policy interest rate at 4 percent for the fourth month as the Governing Council assesses the impact of the credit crunch on the European Economies. The September flash harmonized index of consumer prices was slightly above the inflation target of 2 percent for the first time since August 2006. M3 money supply growth has consistently been above the reference target of 4.5 percent. M3 growth soared by 11.4 percent for the three months ending in August when compared with the same three months a year earlier. While recent economic indicators have been weaker, the economy continues to grow while unemployment continues to decline. The ECB has been under pressure from The French especially to cut rates to preserve economic growth. Analysts will be scrutinizing the comments of Bank president Jean Claude Trichet at his press conference 45 minutes after the announcement.

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