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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
1/10/08
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Highlights
As expected, the European Central Bank kept its key interest rate unchanged at 4 percent. Downside risks to growth are offsetting inflationary pressures for now. With the HICP hovering at its highest level in six and a half years, ECB president Jean Claude Trichet undoubtedly will say yet again that the ECB stands ready to increase interest rates if need be, to prevent the emergence of second-round inflation effects. Flash HICP for December was up 3.1 percent on the year.
There are numerous inflationary pressures that concern the Governing Council of the ECB. One concerns aggressive union demands after years of constraint. Higher prices for oil and food pose a very real risk of inflation expectations becoming unhinged and of wage gains outpacing productivity growth. The ECB has hinted that it could resume its rate-tightening cycle once the market turmoil subsides and assuming that economic growth is not unduly affected.
Analysts will pay close attention to the monthly press conference that ECB president Jean Claude Trichet holds at the conclusion of the policy meeting each month. He is expected to repeat that the Bank is ready to counter upside risks to price stability by acting in a firm and timely manner. He will probably say that the ECB is monitoring developments very closely and is determined to anchor inflation expectations. He is expected to balance these statements by stressing the uncertainty facing the economic outlook due to the ongoing financial market turmoil and conceding that downside risks to growth persist.
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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. In August, flash HICP eased to 3.8 percent from 4.1 percent in July. Money supply growth has eased from its peak of 12 percent in October and November of 2007 but still expanded at a rate of 9.9 percent for the three months ending in July when compared with the same three months a year earlier. |
Data Source: Haver Analytics | Consensus Data Source: Market News International and Thomson Financial
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