What Is Mario Drahi’s Roadmap on ECB Policy?

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May 8 (Bloomberg) -- Laurence Boone, chief European economist at Bank of America Merrill Lynch, previews today’s decision from the European Central Bank and what goes into making a rate decision on Bloomberg Television’s “The Pulse.”

He seems to be speaking more often before an e.c.b. decision.

Very interesting before the e.c.b. decision.

One, the finance ministers, there are some official -- finance minister was quite interesting to see the french, the italian and spanish coming out saying more liquidity and others saying less, less.

Then we had no market news at this time.

I don't know if you noticed.

So maybe no decision.

A balanced decision.

Does fact that these guys are all trying to get their word in tell us that it is very finely balanced and that things are close or that actually we're not going to get anything out because it is too ll to make a decision?

They will try.

National concern and focus on the euro-zone.

I think it is a very thin line for the e.c.b., as you highlighted inflation is the target.

It has been for a while.

The april number was quite good.

Everything the e.c.b. was expecting materialized.

Highlighting the exchange rates.

1.39 now.

That is a big move.

They focused on on the trade-weights exchange rates.

At the same time, mario draghi has surprised in the past.

Right?

There are clear deflationary risks.

Today would make an ideal surprise move.

It does.

The trade-weight is really flat.

He did it in november and may.

This time we had so surprise.

Maybe -- maybe for once he will behave in a more orthodox manner.

When he revises his forecast to make a move.

One which is difficult for him when you compare with the b.o.e. or with the fed, the german -- is unlikely to be willing to move.

The inflation rate is slightly ticking up.

What is less likely to be used if the decision was taken and further action was required?

It is interesting.

Mario draghi may be thinking his forward guidance was not clear enough.

On april 24, what he would do and how he would use his toolbox.

You basically have three types of tools.

Interest rates, liquidity and then you have q.e. and he was very specific in using that.

Interest rate is for monetary tightening.

A higher exchange rate -- a rising rate globally.

It hasn't happened.

We have ticked one box.

Might be something to be able to make a diagnosis about before they are closer to the -- and we can move to the last one which is q.e. and there he was extremely specific in saying you need a big shock on g.d.p. and inflation before we see any q.e. do we have any indications that that would actually work?

At the moment he is very good at talking the talk saying this is the last resort.

How do we know it would do anything on currencies?

I don't think it would do anything for the -- for reasons that you're highlighting.

Firms from u.s. are coming from the financial markets and from europe is banks.

Without the political concerns, there is no way this materializes.

Thank you so much for all of

This text has been automatically generated. It may not be 100% accurate.

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