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2008 Economic Calendar |
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Resource Center » U.S. & Intl Recaps | Release Dates | Why Investors Care | Today's Calendar
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The European Central Bank Governing Council consists of 18 members. The Committee meets twice a month. The first monthly meeting of the month is devoted to monetary policy. Changes in monetary policy if any are announced immediately after the meetings. A press conference is held about 45 minutes after the meeting ends. A statement is read concerning their action -- or lack of it -- followed by a question and answer period. The ECB does not publish any minutes for its meetings. Why Investors Care
Highlights
As expected the ECB increased its policy interest rate by 25 basis points to 2.5 percent. The move had been well telegraphed in advance. Inflation continues to run above the ECB's 2 percent ceiling and money supply is also growing at a rapid pace. At his press conference following the meeting, ECB President Jean Claude Trichet said that the increase reflected the upside of inflation risks. The harmonized index of consumer prices, the index used by the ECB to measure inflation was up 2.4 percent on the year in January and staff projections show that the HICP will remain above the ECB inflation threshold of 2 percent. But core HICP which excludes food and energy, slowed to 1.2 percent on the year. He also said that monetary policy remained accommodative. Some governing council members are known to be worried about the impact of historically low interest rates on consumer borrowing and property prices.
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The ECB monitors two "pillars" of monetary policy - the harmonized index of consumer prices (HICP) and M3 money supply - in its objective to control inflation. The ceiling for HICP growth is 2 percent. M3 growth is targeted at a 4.5 percent growth rate. The Bank has had trouble controlling both but has been reluctant until recently to increase interest rates. In November, the flash HICP was 1.8 percent when compared with the same month a year ago. Money supply growth expanded at 8.4 percent rate for the three months ending in October when compared with the same three months a year earlier. The ECB increased interest rates in December 2005 for the first time since June 5, 2003. It followed with increases in March, June, August and October. With today's increase, the ECB's current policy interest rate is 3.5 percent. |
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