For the next three days,European Central Bank (ECB) officials will walk a communications tightrope.
With the latest inflation figures showing the return of price declines, the window of opportunity is closing for the ECB to signal any stimulus intentions for its March 10 decision before a self-imposed quiet period starts on Thursday. Executive Board member Benoit Coeure, the architect of euro-area quantitative easing, will speak in both Frankfurt and Brussels on Wednesday, with hints also possible from his colleague Sabine Lautenschlaeger and national central bank heads.
“Governing Council members will be more mindful than ever about how their comments will be interpreted in the run-up to what may be most important meeting this year,” said Timo Del Carpio, European economist at RBC Europe Ltd. in London. At the same time, the ECB is “working hard to dissuade people of the notion that its hands are tied.”
The ECB’s fight against persistently low inflation using negative interest rates and a 1.5 trillion-euro ($1.6 trillion) bond-buying plan has made little visible progress. Euro-area consumer-price growth has fallen short of the goal of just under 2 percent since early 2013.
The inflation rate dropped to minus 0.2 percent in the year through February from a positive reading of 0.3 percent the previous month, according to data published Monday. Core inflation, which strips
out volatile food and energy, slowed to 0.7 percent from
The ECB is “in the orange zone, or red zone” when it comes to its inflation mandate, said Jean-Francois Perrin, an inflation strategist at Credit Agricole CIB in Paris. “It will have to do more.”
What more it will do won’t be formally agreed on by the Governing Council until the morning of March 10, shortly before the central bank announces its interest-rate decision and President Mario Draghi holds a press conference. That casts the spotlight on this week’s public appearances.