Brussels/Valencia, 03/06/2015 (Agence Europe) - The European Central Bank (ECB) will “shortly” come up with updated rules to minimise conflicts of interest.
The head of the ECB, Mario Draghi, commented on the Coeuré episode: “That was a mistake. We should avoid any situation of conflict of interest. We will modernize our rules, we shortly will come up with new rules.”
In the middle of May, Benoît Coeuré, member of the ECB's Executive Council, told a group of sovereign fund managers that the ECB would be boosting its purchase of bonds as part of its quantitative easing programme before the summer to stimulate the economy to a level corresponding to its primary mission. The announcement caused fluctuations in the euro exchange rate although Coeuré's speech that evening wasn't published until the next day. “The text was supposed to go live at the same time,” explained Draghi.
On 29 May, the ECB bought more than €146 billion of public bonds as part of its quantitative easing programme.
Asked about the speed at which inflation had picked up under the ECB's quantitative easing programme, Draghi said he wasn't surprised. After reaching the lowest level at the start of 2015, inflation has returned to positive figures (0.3% in May, according to Eurostat). The European institution has slightly increased its annual inflation forecasts for 2015 to 0.3% without changing the forecasts for 2016 (1.5%) and 2017 (1.8%). Draghi said the rising inflation “strengthened the governing council in its determination vis-a-vis the design of QE and other previous policy measures” such as mass injections of liquidity and the purchase of private bonds. Asked about the end of QE, he said: “We are not there yet, we are still a long way off.”
Expecting the basis of economic growth to expand, Draghi, the former governor of Banca d'Italia, said that “recovery is on track exactly according to our projections. Slight, modest loss of momentum. Mostly due to economies outside euro area, emerging countries. Domestic demand in the euro area remains strong.” The ECB expects eurozone growth to be 1.5% in 2015, 1.9% in 2016 and 2.0% in 2017.
On the budget front, the ECB says the aggregate eurozone general government deficit ratio is projected to decline gradually from 2.1% of GDP this year to 1.5% in 2017. The general government debt ratio is projected to decline gradually from 91.5% of GDP this year to 88.4% over the same period.
The ECB has kept the interest rates unchanged for the main re-financing operations (0.05%), the marginal lending facility (0.3%) and the deposit facility (-0.2%). (Mathieu Bion)