Mario Draghi made quite a few statements in the press conference, but he certainly made it clear that he opposes big bond buys.
Here is a wrap up of the hectic presser, covered in full in the live blog, that left the euro weaker.
- ECB introduced new liquidity programs for banks, for up to three years – very long.
- Credit rating needed for collateral with the ECB has been lowered.
- Reserve ratio has been lowered.
All this sent the euro higher at the beginning of the event. But then he denied any help to bond markets:
- Bigger bond buys not discussed – no QE. This is contrary to previous hints. Is he putting pressure towards the EU Summit?
- Using the IMF to bypass the treaty is against the spirit of the treat – will not happen. He repeated this several times.
- The spirit of the Bundesbank is more important.
- No discussion of capping yields.
- Sterilization of bond buys is a pre-condition
This sent the euro way down. It lost the 1.3360 line and temporarily dipped under 1.3320. This line could be broken later on.
Other Notes.
- Forecasts have been lowered to include a contraction of 0.4% in 2012. Draghi sees growth late in 2012.
- Rate cut was not unanimous
- Regarding the liquidity provision, Draghi slipped “We can see if we can keep the banking system liquid” – this doesn’t sound good.
For more on the euro, see the EUR/USD forecast.
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