Euro rises as ECB president Draghi says single currency is 'irrevocable'- as it happened
European Central Bank says 'sense of urgency' has diminished, as it leaves interest rates at record lows
- Latest: Draghi says euro is here to stay
- Experts: Flip-flopping from curveball king Draghi
- Mario Draghi's press conference: highlight start here
- ECB leaves rates on hold
Earlier:
3.51pm GMT
That's all for today.
The European Central Bank reported signs of an improving eurozone economy Thursday, but said it would keep cheap money gushing for fear of undermining the recovery.
ECB watchers were alert for any tightening of the ECB's ultra-loose policy as inflation rates rise and prospects for growth in the 19-nation single currency area improve.
3.15pm GMT
Kathleen Brooks of City Index says Mario Draghi has proved he was the "king of curveballs" at today's press conference in Frankfurt.
After delivering what was arguably a dovish statement early on in his press conference, and clearly stating that for the ECB's GDP and inflation forecasts are conditional on the implementation "of all our policy measures", Draghi displayed a more hawkish tone during the Q&A.
The key takeaway from this month's ECB meeting appears contradictory: QE is here to stay in the Eurozone, until at least the end of this year. However, more policy action is less likely because deflation risks have receded. Reading between the lines suggests that the next change from the ECB will be towards removing accommodation and not adding it.
"Draghi has ever so slightly opened the door to changing their policy stance. He's done this by saying that the Governing Council talked about changing the language about where rates are in their monthly statement, but didn't actually change it. This is effectively him signalling that something might change in the future, just not today.
"It's a classic Draghi technique of saying something that will move markets without actually doing anything. Due to this, and a wordy response to a question about raising rates before QE ends, markets will now start to recalibrate on the assumption that the ECB will remove accommodation towards the end of the year."
The ECB and Mario Draghi celebrated its two year anniversary of its Asset Purchase Program by being marginally less dovish than expected in the monthly press conference. It was an interesting balancing act for Draghi between unchanged monetary policy stimulus policies and improved economic prospects. The market took the upgraded forecasts for growth and inflation in its stride.
However they reacted more positively when Draghi stated that there was no longer a 'sense of urgency on taking further actions' to boost inflation and the recovery. Indeed Draghi further said the 'risks to deflation have largely disappeared'.
First (and largest revision) to staff forecasts for inflation since June 2015. But the ECB will "look through" the hump. pic.twitter.com/LeiQnjENx3
2.45pm GMT
The press conference ends with Mario Draghi insisting that the euro is irrevocable, and not going to break up.
The ECB president declares that:
The euro is here to stay. It's not about whether or not it is irrevocable. It is.
Draghi: The euro is here to stay. It is irrevocable. A more productive question is how do we increase prosperity?
The #Euro is here to stay - question not so much if it's irrevocable but how do we make it function better and increase propsperity #Draghi
2.29pm GMT
German bond prices are falling, driving up the yield on the debt.
Traders are reacting to the news that the ECB has dropped its pledge to use 'all available instruments' to achieve its mandate, and is now less worried about deflation.
#Germany's 10y yields jump as #ECB's Draghi less dovish than expected. pic.twitter.com/MkoNeiaJFF
2.28pm GMT
Mario Draghi is treading an interesting path at today's press conference.
On the one hand, he's talking up the prospects for the eurozone economy and saying there is no longer a deflation risk.
If you don't think Draghi's 'everything great, huge downside risks' makes sense yr forgetting abt something that rhymes w Bench Collection
2.24pm GMT
Q: Were today's decisions unanimous?
Enigmatically, Draghi says the discussion was 'consensual'.....
#Draghi: "the discussion today was pretty consensual" but refuses to compare it with the last meeting.
2.24pm GMT
Rather sweetly, Draghi suggests that it's 18 months since Britain voted to leave the EU.
Just nine, old boy. Although it sometimes feels like nine years...
Draghi thinks its been 18 months since Brexit. It's been 9
2.20pm GMT
Draghi says the governing council did not discuss ending its QE programme, or boosting it, at today's meeting.
2.20pm GMT
Mario Draghi sounds somewhat concerned about geopolitics, warning that global risks have risen recently.
We haven't yet seen negative consequences from the Brexit vote, he adds, but it's not clear how various 'risk events' will play out.
#Draghi says domestic risks are now more contained but then spends 2 minutes explaining how elections actually make everything uncertain...
ECB's Draghi says geopolitical global risks have gone up.
Draghi: we don't know yet how political risk events will reverberate in economies.
2.17pm GMT
Draghi is asked about the criticism of Germany's trade surplus from Peter Navarro, trade advisor to Donald Trump, who argues that the euro is unfairly weak.
Draghi defends Berlin, saying he doesn't see any merit in attacking Germany.
"I don't think there is any merit in attacking Germany" - Draghi
2.12pm GMT
Q: Could the ECB raise interest rates before it has ended its QE programme?
Draghi ducks the question. And that's interesting, as he's previously insisted that rate would not rise until the asset-purchase programme had concludes.
New room for speculation. #Draghi dodges answer on whether rate hikes could be possible before end of QE.
2.08pm GMT
On deflation....Mario Draghi says that the risks have "largely disappeared", adding:
Market-based inflation expectations have increased noticeably.
2.06pm GMT
In a hawkish move, the European central bank has dropped an important line from its statement.
The pledge to use "all the instruments at its disposal" if necessary to achieve it mandates has been removed.
#Draghi #ECB draws attention to dropping of reference to "use all instruments" to indicate sense of urgency has gone
2.01pm GMT
Hello again. Sorry about that breakdown - while I was away, Mario Draghi has been speaking to the press in Frankfurt.
The ECB president has announced slightly higher growth forecasts; GDP is now expected to rise by 1.8% in 2017 (up from 1.7% in December) and by 1.6% in 2018 (up from 1.5%)
Draghi: ECB staff projections: HICP at 1.7% in 2017 (1.3% in Dec proj), 1.6% in 2018 (1.5%), 1.7% in 2019 (unchanged)
The risks surrounding the euro area growth outlook have become less pronounced, but remain tilted to the downside and relate predominantly to global factors.
1.27pm GMT
We're having a few technical issues here , so might miss the start of the ECB press conference #developing....
1.18pm GMT
Markus Ferber, a German conservative MEP, is unhappy that the European Central Bank didn't raise interest rates today.
Ferber argues that the ECB should have responded to the recent rise in euro area inflation, to 2%.
"The inflation rate is picking up and the European economy is growing strongly. Now would be the perfect time for Mario Draghi to show a little courage and end the period of zero interest rate. The craving for cheap money is like an addiction that has to stop now. This is even more so as monetary policy in the USA and the EU are at risk of drifting further and further apart.
In the US, the main interest rate is already higher than in the Eurozone and the Federal Reserve plans to have two to three additional interest rate hikes this year alone. I am disappointed that the ECB missed yet another chance to initialise a normalisation of monetary policy."
1.16pm GMT
Naeem Aslam of Think Markets says investors need to watch the political landscape closely, to understand why the ECB didn't change policy today.
We have two major events coming up which can have some serious impact on the Euro; the elections in Netherland and elections over in France. If any of these anti- euro party wins the election, this would create a lot of trouble for the European central bank. Basically, when you have the concept of euro under threat, the last thing you want to do is to create more panic in the market.
It is in Draghi's interest to keep buying more time until we have navigated through all these storms and sailing becomes smoother.
1.07pm GMT
While we wait for Draghi, here's a photo of a papier mache caricature of Europe's most powerful central banker, from the Rose Monday carnival parade in Cologne last month.
It must have been popular with German savers who dislike Draghi's decision to cut interest rates to zero.
12.59pm GMT
Here's some instant reaction to the ECB announcement:
ECB plays it cautious: Leaves open option of even lower interest rates; No change to rates, QE
As expected, steady as she goes from the #ECB. Draghi's presser the focal point with an eye on forward guidance. https://t.co/whJeugb9kh
Sounds very dovish: #ECB confirms to buy a60bn in Bonds from Apr 2017. Says ready to Increase #QE Program if Outlook Worsens. pic.twitter.com/y41X3o1XBb
12.59pm GMT
The European Central Bank has also declared it will keep running its stimulus programme.
And despite pressure from hawks to start tightening, the ECB insists it could boost its bond-buying firepower if needed.
Regarding non-standard monetary policy measures, the Governing Council confirms that it will continue to make purchases under the asset purchase programme (APP) at the current monthly pace of a80 billion until the end of this month and that, from April 2017, the net asset purchases are intended to continue at a monthly pace of a60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.
The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration.
12.52pm GMT
Here we go! The European Central Bank has left interest rates unchanged at today's meeting, and kept its pledge to cut them again in future if needed.
That means that borrowing costs stay at their current record lows, despite inflation jumping to 2% this month.
The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.
12.38pm GMT
Capital Economics predict that Mario Draghi will resist pressure to start considering tightening monetary policy:
Key question ahead of #ECB is whether it will soften pledge to keep rates at current levels or lower for extended period. We doubt it.
12.33pm GMT
Here's something for the ECB to chew on -- more than three quarters of Greek families have difficulty, or great difficulty, making ends meet.
That's one factoid in a new UK report into national wellbeing, released this morning by the Office for National Statistics.
According to data from Eurostat, 16% of all households in the UK reported great difficulty or difficulty in making ends meet in 2015.
This was lower than the estimated EU-28 average of 26%, and was the same as Estonia (16%). The countries with the highest proportion of households reporting great difficulty or difficulty in making ends meet were Greece (78%) and Bulgaria (64%), while the lowest proportion of households were in Sweden (5%) and Finland (7%).
12.23pm GMT
It's nearly time for the European Central Bank to end the suspense (!) and reveal the results of today's governing council meeting, at 12.45 GMT (1.45pm in Frankfurt)
We're not expecting any changes to interest rates, but the ECB easily change the language in today's announcement.
Key in ECB release at 13:45 (a) will the ECB stick with the 'or lower' guidance on rates (b) will it maintain it is 'ready to increase' QE
ECB preview: fine-tuning the forward guidance. #icymi https://t.co/m2ixbo7x82 pic.twitter.com/QIwTaUoSvc
11.53am GMT
Sir Martin Sorrell, the advertising magnate, isn't suffering from the wage squeeze.
WPP has reported that CEO Sorrell will receive more than 40m though its LEAP incentive plan, pushing his total package closer to 50m.
Sir Martin Sorrell gets 41.56m from incentive scheme last year, down 34% from 2015. Last yr of heavily-criticised LEAP scheme
Sorrell's full remuneration, including his pay, will be close to 50m probs, revealed in annual report next month
11.45am GMT
It's turning into a bad week for the markets.
Shares, bonds and commodity prices have all weakened since Monday, the cost of insuring bonds has gone up, and most currencies have lost ground against the US dollar.
This week has been a sea of red for world markets. Here's the Global Macro Monitor's biggest moves starting from Sunday evening pic.twitter.com/3ljR9BUtgC
11.42am GMT
In London the FTSE 100 index is now down 50 points, or 0.6%, at 7283, and on track for its sixth loss in a row.
Oil companies have now joined the big fallers, with Shell down 3% following the drop in the crude price. Mining stocks are being hit hard too.
The miners are getting pummeled https://t.co/GGHrjV4FjF pic.twitter.com/kDa20gotnZ
Signs of a broad-based risk off mentality are cropping up like spring daffodils at present. Yesterday's plunge in oil prices took most of the attention, but the other major warning signal was the rout in junk bonds; like stocks these have gained significantly since the election, and like stocks they enjoyed more gains in February. The heavy selling in the high yield ETF over the past week sounds another alarm for equity bulls.
To add to the signs of doom, mining shares in London are in full-blown retreat, as a stronger dollar and falling commodity prices take their toll
10.58am GMT
The German banking industry has urged the European Central Bank to give a signal today that it could start unwinding its ultra-loose monetary policy stance soon.
The BdB private banking association said the fact that the threat of deflation has disappeared in the euro zone and inflation was picking up justified its recommendation.
"Such a step must be prepared very, very well" and policymakers should communicate it carefully, BdB head Michael Kemmer told Deutschlandfunk radio on Thursday.
Draghi doesn't want a repeat of 2011 or 2008, when the ECB tightened too quickly. This fear is likely to drive policymakers to remain dovish and keep the taps open. The risks remain to the downside - even with what markets consider 'too much' QE.
The 'high class problem' talked about by Draghi is that the European economy is doing better and the talk is now of tightening. The longer the ECB is minded to refrain from changing policy, the more markets will expect a rate rise or tapering to come. Indeed markets are doing a lot of the tightening work for the ECB as the front end of the yield curve is rising.
10.25am GMT
Newsflash: The price of US crude oil has suddenly taken a tumble, dropping below $50 per barrel for the first time since December 2016.
Oil just fell out of bed again. https://t.co/UH625jJMHu pic.twitter.com/AsEJAQ6Pks
9.54am GMT
Speaking of weak pay.... John Lewis staff have just learned that they're getting their smallest bonus since the 1950s.
Employees will receive an extra three week's pay, or 6% of basic salary, under its profit-sharing scheme (John Lewis is owner by its workers, or 'partners').
John Lewis cuts its bonus for workers from 10pc to 6pc after warning of a 'significant' reduction.
Related: John Lewis slashes staff bonus to 6% - the lowest in 63 years
9.37am GMT
British workers are suffering the worst decade for pay growth since Arthur Wellesley was giving Napoleon Bonaparte a bloody nose at Waterloo.
That's the verdict of the Resolution Foundation, which has crunched the numbers in yesterday's budget.
"The big picture from yesterday's budget is that the big squeezes on both the public and family finances have been prolonged well into the 2020s.
"While the Office for Budget Responsibility at least delivered some good news on borrowing, the family finances picture has actually deteriorated since the autumn statement. Britain is set for a return to falling real pay later this year, with this decade now set to be the worst for pay growth since the Napoleonic wars.
Related: UK in worst decade for pay growth for 210 years, says thinktank
9.18am GMT
Today's European Central Bank meeting is also overshadowed by presidential elections in France and the Netherlands.
And that's another reason for the ECB to sit tight today, argues Carsten Brzeski of ING:
"With headline inflation in the euro zone back at the magic 2 percent, the ECB hawks and critics will gradually sense that their moment has come to push for tapering.
"In our view, however, they will not want to add any new uncertainty in the eve of two important elections in the Eurozone."
8.58am GMT
Several experts are arguing that the European Central Bank should ignore calls to start winding back its stimulus programme.
Guntram Wolff of the Bruegel thinktank says underlying inflationary pressures are still too weak:
Commentators in DE argue #ECB should change course as inflation at 2%. Would be big mistake. Core inflation remains low. dynamics still weak
We seem to have entered a post-inflation era for central bankers, who used to try and prevent price pressures from building. Now we tend to see a willingness for central banks, including the Bank of England, the ECB and, to a smaller extent, the Federal Reserve, to look through periods of high inflation in order to protect growth. Thus, the fact that headline CPI reached 2% is unlikely to deter the ECB from keeping rates in negative territory and maintaining asset purchases, potentially into 2018. We do expect the ECB to revise up its long-term inflation forecast at tomorrow's meeting, which could trigger some euro buying as the market anticipates a premature end to the ECB's QE programme.
We also don't expect the ECB to announce any plans to taper its asset purchases any time soon. Firstly, growth in the region remains uneven, for example, the Greek economy contracted sharply at the end of 2016, Finnish growth was flat and Italy could only muster growth of 1%. These are economies that need support from their central bank, and even the German finance minister in a recent speech noted that the ECB was doing a good job to balance policy for all Eurozone members. We think that the ECB is approx. 6-months away from announcing a taper to its QE programme.
No policy change is expected....Mario Draghi will acknowledge the better economic backdrop and higher inflation, but avoid any watering-down of the dovish bias.
8.50am GMT
It's two years since the European Central Bank took the plunge and started stimulating the eurozone economy with newly created money.
And just look how it's grown....
Happy birthday #ECB's QE program! PSPP launched 2 years ago today. I can't believe how much you have grown. Just look at you today... pic.twitter.com/CLD1YQV1BG
8.41am GMT
European stock markets have opened in the red, as investors await news from the ECB at lunchtime.
8.25am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The European Central Bank's governing council may have a spring in its step today, as policymakers gather for their latest policy meeting in Frankfurt.
The market will be watching for any changes to the ECB's language today, particularly whether it may drop its current bias toward lower interest rates which would likely be interpreted as a potential signal that the period of ultra-accommodative monetary policy is coming to an end, even if the ECB is still someway from signalling a readiness to raise rates. Our view is that the Governing Council will keep its forward guidance language as is for the time being pointing to the continued weakness of core inflation as justification.
Happy ECB day @50pips
What colour is your tie? ;-) pic.twitter.com/y7UYxuETsJ
BREAKING: Tory MP Anne-Marie Trevelyan says amendment needed to remove NIC rise from Budget. Rebellion on.
Everyone in the Neville household is sad at John Lewis banning press from bonus announcement tomorrow... pic.twitter.com/xzOK5fw46o
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