Mario Draghi rips up the rulebook on European Central Bank minutes

Julian Harris
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Mario Draghi unveiled a new system for communicating policymakers’ thinking
European Central Bank (ECB) boss Mario Draghi said yesterday that the bank’s monetary stance would remain unchanged for the coming month, as he unveiled a new system for communicating its policymakers’ thinking.

From the start of next year, the euro area’s central bank will meet every six weeks, instead of monthly. The extra time period will allow for the publication of minutes of the ECB’s policy meetings, a practice followed by peers such as the Bank of England.

“If one wants to have a published account of the meetings, it gets a little complicated to have an account if you have monthly meetings,” Draghi said.

“It is easier to have it if you have [meetings] every six weeks, because it gives space for producing the account in a way that doesn’t disturb the expectations for further action and doesn’t in a sense confuse the reception by the markets about the previous action that has been taken.”

While keeping policy held, Draghi also said that risks facing the Eurozone economy meant interest rates would stay low for an extended period, and added that quantitative easing remained an option.

“The governing council is unanimous in its commitment to also using unconventional instruments within its mandate, should it become necessary to further address risks of too prolonged a period of low inflation.”

Draghi was speaking after new survey data showed business expanding at the slowest rate in six months in June. Markit’s purchasing managers’ index (PMI) for firms across the economy came in at 52.8, down from 53.5.

The PMI score for the services industry fell to 52.8 from 53.2, also above the 50 mark that signifies growth yet still at a subdued level.

And separate figures published in Brussels showed that retail sales in the euro area stagnated in May. April’s figures were revised down, meanwhile, in a sign that high unemployment continued to erode households’ purchasing plans. Germany, Europe’s largest economy, recorded a 0.6 per cent year-on-year fall in May.

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