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ECB Announcement
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Definition
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
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| Released on
12/6/07
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Change
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0bp
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0
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Highlights
As expected, the European Central Bank left its key interest rate at 4 percent. The ECB continues to be squeezed between accelerating inflation and weakening growth. November flash harmonized consumer price index was up by 3 percent when compared with a year ago and was far above the ECB inflation target of less than 2 percent. At the same time, recent economic data suggest that the EMU economy will not escape the ravages of recent financial market turmoil. ECB officials have argued that more time is needed to assess the macroeconomic impact of the global credit squeeze.
Analysts will pay close attention to the monthly press conference that ECB president Jean Claude Trichet holds at the conclusion of the policy meeting each month. He is expected to repeat that the Bank is ready to counter upside risks to price stability by acting in a firm and timely manner. He will probably say that the ECB is monitoring developments very closely and is determined to anchor inflation expectations. He is expected to balance these statements by stressing the uncertainty facing the economic outlook due to the ongoing financial market turmoil and conceding that downside risks to growth persist.
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Trends
![[Chart]](chart.gif)
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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 reference growth rate. The Bank had trouble controlling both but was reluctant to increase interest rates until December 2005. In November, the flash HICP was up 3.0 percent while money supply growth expanded at a rate of 11.7 percent for the three months ending in October when compared with the same three months a year earlier. After a series of rate increases, the ECB is expected to remain on hold for at least the next several months. |
Data Source: Haver Analytics
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