Senior Economics Correspondent, Germany
Paul's Feed
Apr 14, 2014

Draghi puts euro strength at centre of ECB policy debate

FRANKFURT/LONDON, April 14 (Reuters) – By expressing concern
at the euro’s strength, European Central Bank President Mario
Draghi is trying to talk down the currency and avoid taking
fresh action to tackle worryingly low inflation – but financial
markets will test his resolve.

Draghi identified the currency’s strength at the weekend as
a possible trigger for the ECB to ease policy, saying in
Washington: “The strengthening of the exchange rate would
require further monetary policy accommodation.”

Apr 11, 2014

Draghi takes slow road to QE with packaged-debt push

FRANKFURT (Reuters) – The European Central Bank is mulling creative measures to stave off deflation but one of them, revamping a market that was at the heart of the financial crisis, will take time with no guarantee it will take off.

It is scrambling to boost Europe’s market for securitized assets – those backed by loans.

Apr 8, 2014

Bundesbank says ‘low-flation’ high on agenda at IMF meeting

FRANKFURT (Reuters) – Persistently low inflation in the euro zone and the resulting risks for the global economy will feature high on the agenda of the spring meetings of the International Monetary Fund and the G20, Germany’s Bundesbank said on Tuesday.

The European Central Bank has resisted IMF calls to ease monetary policy further to combat the risk of so-called “low-flation”, which the IMF fears could drag on global growth in the short term, along with geopolitical tensions in places like Ukraine, and market volatility.

Mar 14, 2014

Draghi holds course in face of deflation threat

FRANKFURT/WASHINGTON (Reuters) – Meeting students at the University of Amsterdam in April last year, European Central Bank President Mario Draghi extolled the virtues of courage, recalling a story his father had told him:

“In between the wars, he saw an inscription on a German monument, a German statue saying that ‘if you lose your money you’ve lost nothing, because with a good business you will take it back; if you lose honor, you’ve lost a lot, but with good heroic action you can get it back; but if you’ve lost courage, you’ve lost everything.’”

Mar 13, 2014

ECB hawks play down deflation risk and need for policy action

FRANKFURT, March 13 (Reuters) – The European Central Bank is
running out of conventional policy tools and any new action
would quickly take it into territory where legal questions about
some options would arise, Bundesbank chief Jens Weidmann said.

A day after a batch of ECB policymakers underlined their
readiness to take policy action if needed, Weidmann and Dutch
central bank chief Klaas Knot on Thursday highlighted the
barriers to the ECB adopting unconventional policy measures.

Mar 3, 2014

ECB readies back door step to loosen policy

FRANKFURT (Reuters) – The European Central Bank is poised to take action to loosen lending conditions and drag inflation out of a “danger zone” that threatens to stagnate the euro zone’s fragile recovery.

Inflation is running at 0.8 percent, far below the ECB’s target of just under 2 percent, and banks’ early repayment of bumper loans they took from the central bank is draining funds from the financial system – effectively tightening policy.

Feb 27, 2014

Euro zone lending contraction compounds ECB headache

FRANKFURT (Reuters) – Lending to households and firms in the euro zone fell again in January and money supply growth remained subdued, adding to pressure on the European Central Bank to take action next week to support the economy.

The ECB has cut interest rates to a record low, pumped extra liquidity into the banking system and announced a fresh government bond purchase program, but the measures have so far not managed to unclog lending to the real economy.

Feb 17, 2014

Bundesbank sees muted impact from emerging market turmoil

FRANKFURT (Reuters) – The turbulence experienced in emerging markets early this year is insufficient to derail a recovery in the global economy, which could strengthen during 2014, the Bundesbank said on Monday.

Currencies in Turkey, South Africa, Hungary and Russia suffered major sell-offs over the past month before recovering slightly after central banks fought back via interest rates hikes or exchange rate interventions.

Feb 12, 2014

ECB bond-buying intact and ready after court decision: Coeure

FRANKFURT (Reuters) – The status of the European Central Bank’s flagship crisis-fighting tool is unchanged after the assertion of Germany’s top court that it exceeded the bank’s mandate, ECB Executive Board member Benoit Coeure said.

Speaking to Reuters as part of a series of interviews with top policymakers across the euro zone, Coeure said the ECB had no need to use the so-called Outright Monetary Transactions (OMT) program now.

Feb 10, 2014

ECB bond-buy tool weakened by German court: ZEW chief

FRANKFURT (Reuters) – The European Central Bank’s flagship crisis-fighting tool has been severely blunted by the assertion of Germany’s top court that it exceeded the ECB’s mandate, the head of the German ZEW think tank said.

Germany’s Constitutional Court will refer a complaint against the plan to the European Court of Justice but, in an apparent attempt to direct the ECJ’s deliberations, said the scheme appeared to violate a ban on the ECB funding governments.

    • About Paul

      "I lead our economic news file from Berlin, where we report on the performance of the German economy – Europe’s largest – and economic policy: everything from financial regulation to dealing with the euro zone debt crisis. I previously reported on political and economic news from Paris and on earlier assignments worked in Frankfurt, Vienna and London."
    • Follow Paul