After today’s surprise ECB move it is safe to forget the code words former ECB President Jean-Claude Trichet never grew tired of using – monitoring closely, monitoring very closely, strong vigilance, rate hike. (No real code language ever emerged for rate cuts, probably because there were only a few and that was towards the end of Trichet’s term.)
His successor, Mario Draghi, has a different style, one he showcased already at his very first policy meeting, but no one believed to be the norm: He is pro-active and cuts without warning. Or at least that’s what it seems.
Today’s quarter-percentage point cut took markets and economists by surprise.
When asked about the ECB’s communication strategy by somewhat flabbergasted journalists at the post-meeting news conference, Draghi said: “I will abstain from judging markets. This is one of the hardest things and it is usually useless, because they do what they want, no matter what,” he said, setting off some chuckling in the room.
The clue everybody had overlooked in the previous introductory statement had been the condition of an “unchanged overall subdued outlook for inflation”, Draghi helped his audience along. “Since the last time I read this statement, there have been changes and these changes have been judged to be of significance.”