GADFLY: How will Mario Draghi dig himself out of this hole?
There’s more to this than the president of the European Central Bank looking like he’s being economical with the truth
London — European Central Bank (ECB) president Mario Draghi has some explaining to do on Thursday. At the press conference following the December 14 policy decision, he was asked if officials discussed severing the link between guidance on the Asset Purchase Programme (APP) and inflation, so that policy on future bond purchases would not depend on the outlook for price gains. This is how he responded: "We didn’t discuss cutting the link. That was not discussed." Which is curious, given that minutes of the policy meeting, published on January 11 in the bank’s characteristically convoluted prose, said: "It was seen as warranted to reflect on how to transition gradually from the present conditionality focused on APP net purchases to a broader concept of forward guidance comprising various dimensions of the monetary policy stance." Translating the ECB speak, by "present conditionality" the minutes mean "conditional on inflation". So, they did discuss it, then. There’s more to this than ...
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