Draghi dampens talk of ending QE stimulus early - as it happened

Rolling business and financial news, as Mario Draghi gives a lecture on monetary policy in Washington DC

• Latest: Draghi says QE won't end early
• IMF open to all Greek options
• Summary: Greek finance minister won't sign bad deal
• Carney dampens down fears over foreign workers
• Carney: referendum should happen 'as soon as necessary'

6.04pm BST

And finally... Europe's stock markets shrugged off their early weakness, to finish the day with gains across the board:

The reality is that rate hikes are inevitable, but with so much concern that the Fed will jump too soon, the market is understandably skittish. The problem is that any overreaction here could initiate a sell-off that would be nothing short of panicked.

5.44pm BST

A sign that Greece is compromising?

Economy Minister George Stathakis told Bloomberg earlier today that the government is cracking on with the privatisation of privatize the country's largest port, at Piraeus, and regional airports.

Greece to privatize port, airports in concession to creditors http://t.co/cyJjuK026m pic.twitter.com/vsxHxZLXxg

5.38pm BST

Missed this earlier, sorry, but the latest budget figures for Greece were released earlier today - showing that Athens has now squirrelled together a2.5bn in funds this year.

It's achieved this primary surplus deficit by cutting its spending to the bone - expenditure is almost a2bn less than expected.

New data: #Greece govt again hoarding cash thru strong tax collex & miserly spending. a2.5bn to stave off bankruptcy pic.twitter.com/wnNFXC5nyH

Higher tax revenue and lower spending: Syriza are doing everything their creditors demand http://t.co/DHNbOzkTWX pic.twitter.com/pJaKv5ZSmC

5.07pm BST

And that's the end of the conversation. Some interesting insights into Draghi's view of the world; a shame that Christine Lagarde didn't seek his views on the Greek bailout talks. Still, she's not auditioning for Newsnight.

Draghi and Lagarde are now heading off for talks about the situation in Europe -- Greece will surely be on the top of the agenda....

5.01pm BST

What will the ECB's policy response be like in 2020, asks Olivier Blanchard (he gets a question as a special treat to mark his retirement)

Not an easy question, Draghi replies.

We still have the same mandate as before...but in a very different situation, handling different economies in different countries.

4.54pm BST

Lagarde turns to the role of macro-prudential tools -- are they the first line of defence?

Monetary policy has one objective - price stability. And that's a pre-requisite for financial stability, says Draghi.

4.48pm BST

Tackling the fragmented mortgage market across Europe would help enhance the power of monetary policy, says Draghi.

4.45pm BST

Mario Draghi and Christine Lagarde are now enjoying a conversation about monetary policy issues.

4.32pm BST

The charts from Mario Draghi's speech https://t.co/ARMxbdLHRe (speech text here https://t.co/88qDNAbmWh) pic.twitter.com/BnaQ9JuVdm

4.30pm BST

Draghi has also tried to sink the suggestion that the ECB might wind up its QE scheme early:

After almost 7 years of a debilitating sequence of crises, firms and households are very hesitant to take on economic risk. For this reason quite some time is needed before we can declare success, and our monetary policy stimulus will stay in place as long as needed for its objective to be fully achieved on a truly sustained basis.

4.26pm BST

Towards the end of his lecture, Mario Draghi does admit that the unprecedented stimulus launched by the ECB could have negative consequences:

That being said, we have to be mindful that too prolonged a period of very low real rates can have undesirable consequences in the context of ageing societies, where many households save not just to smooth consumption over the cycle, but to smooth consumption over their lifetime. For pensioners, and for those saving ahead of retirement, low interest rates may not be an inducement to bring consumption forward. They may on the contrary become an inducement to save more, to compensate for a slower rate of accumulation of pension assets.

On the contrary, the interest of long-term savers is that output be raised to potential without undue delay. This is because their financial assets are always, in the final analysis, a claim on the wealth generated by the productive part of the economy. So it is in their interest that output growth remains on a robust path as this maximises the likelihood that their claims are honoured in full. At the same time, the more monetary policy is able to encourage investment, the faster interest rates will return into more normal territory.

4.17pm BST

Central banks are often criticised for boosting the wealth of the richest though their asset purchase schemes.

Mario Draghi, though, is arguing that younger Europeans would have suffered disproportionately if the eurozone had been left to fallen into protracted deflation

Draghi: Yes, monetary policy has distributional impact. So does inaction. There is no neutral distribution pic.twitter.com/sH0PotsFil

4.13pm BST

Mario Draghi is now giving the Michel Camdessus lecture. His theme is "The ECB's Recent Monetary Policy Measures: Effectiveness and Challenges".

Faced with an environment of unprecedented complexity, the ECB has taken a series of unconventional measures to prevent a too prolonged period of low inflation and deliver its mandate. Those measures have proven so far to be potent, more so than many observers anticipated. But their potency is also because they have interacted with other policies that have put the economy and the financial sector in a better position to respond to our monetary impulses.

This includes the Comprehensive Assessment of euro area banks. And it includes structural reforms where they have been implemented. By the same token, structural reforms that increase confidence in economic prospects and encourage entrepreneurs to capitalise on today's extremely accommodative financing conditions will make our policy commensurately more powerful.

4.05pm BST

Draghi has screwed up his Between Two Ferns appearance. pic.twitter.com/RscaWIIgy5

4.04pm BST

Christine Lagarde also pays tribute to Mario Draghi, and the leadership he has shown.

Mario-and I cannot emphasize this enough-your job is one of the most difficult. It is in part because it is a very influential one, and you have used that influence to move the euro area in the right direction. Those who know you understand that you are a man of outstanding insight, fierce determination, and above all, courage.

You can call a spade a spade without putting any of your cards on the table.

4.01pm BST

Christine Lagarde is speaking in Washington now, and warning that the task of fixing the world economy is not complete.

I am myself very concerned that slow job growth and rising inequality will come back to haunt us. We need ambitious and decisive policies to boost today's growth and tomorrow's growth potential, and to build resilience to existing and emerging challenges. I am reminded of a saying by Michelangelo:

"The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark."

Notably, the significant further easing of monetary policy in January of this year has done much to stave off the threat of deflation and support weak demand. Monetary policy and price stability are essential for strong, sustainable, and inclusive growth.

3.50pm BST

Looking forward to my #CamdessusLecture discussion with @ecb President Mario Draghi at 10.45am ET. Watch here: http://t.co/geNKR74pKf

3.49pm BST

The IMF are live-streaming Mario Draghi's lecture, which starts in around 10 minutes time at 4pm BST or 11am East Coast.

It's followed by a 'conversation' between Draghi and Christine Lagarde.

3.41pm BST

The International Monetary Fund hasn't given up hope that Greece can complete its bailout programme, despite the months of turmoil and slow progress towards a deal with creditors.

Gerry Rice, the IMF's chief spokesman, is briefing reporters in Washington DC now. He says that the Fund will stand by Athens, so long as it is meeting its bailout programme

"We are flexible. We are open to look at all options. But we must insist on reaching the objectives of the program."

IMF's Rice: IMF working intensely with Greece to procure a deal, IMF head Lagarde to meet with Draghi to discuss developments in Europe: BBG

#IMF repeats it is flexible in #Greece talks as long as program objectives met; working intensely to get deal soon ~spokesman /via @cigolo

3.21pm BST

Germany's top central banker, Jens Weidmann, has weighed in on the Greek crisis.

The head of the Bundesbank criticised the emergency support which the European Central Bank is giving to Greece. He also raised concerns over the ECB's quantitative easing programme, which is mopping up tens of billions of euros of government bonds each month.

Weidmann Criticizes ELA Funding of Greek Banks: Handelsblatt pic.twitter.com/lpn4H046Yx

2.58pm BST

OK, time to recap.

The governor of the Bank of England has downplayed suggestions that foreign workers should be blamed for the UK's poor productivity growth, and weak pay rises.

"I think it's in the interests of everybody that there is clarity about the process and the question and the decision."

#brexit uk's central banker sounds worried bout quitting, rubbishes immigration alleged impact on jobs,wages http://t.co/qtL1lkhtRM

The instructions given to the negotiating team were to move in such a way to speed up the process."

"As finance min I refuse to put my signature to a package .. if it proves mathematically that it doesn't add up," says #YanisVaroufakis

"The idea of a swap between the Greek government and the ECB fills Mr. Draghi's soul with fear. Because you know that Mr. Draghi is in a big struggle against the Bundesbank, which is fighting against QE. Mr. Weidmann in particular is opposing it."

Varoufakis says debt swap fills Draghi's 'soul with fear' http://t.co/Wy213vwt9T #greece

2.54pm BST

It's a real musical chairs day in the word of economics.

Olivier Blanchard, the IMF's top economist, is retiring at the end of September, the Fund just announced.

Lagarde praises Blanchard for "intellectual leadership, wise counsel, friendship, loyalty" http://t.co/a6Xo0Fx8km

2.43pm BST

And here's a photo of the chancellor announcing his devolution plans:

Heseltine, Jim ONeill, council leaders, here to hear from Osborne on Powerhouse at ex-Warehouse Project rave location pic.twitter.com/qmnPKa2qmh

2.40pm BST

Congratulations to Jim O'Neill, the former Goldman Sachs chief economist who coined the idea of the BRICS economies.

1.47pm BST

Look who's coming to London:

Thomas Piketty is to join the London School of Economics as Centennial Professor its new International Inequalities Institute

Piketty joins London School of Economics. http://t.co/2MRAJtBnbv

Related: British Land indicates Tory election win will boost super-prime property

1.32pm BST

Hell hath no fury like a finance minister misquoted.

Yanis Varoufakis has now issued a statement, insisting that he did not propose a delay to repaying the ECB back (as covered earlier), and blasting those who believed he did.

#Greece MoF press release re FinMin @yanisvaroufakis refererence to SMP. #economy #ecb pic.twitter.com/vGRC87fR9n

By the way, worth nothing @ECB also supports @yanisvaroufakis idea of swapping GGB bonds held by ECB for ESM bonds. But not gonna happen.

For Greek speakers, here's @yanisvaroufakis remarks that got everyone so confused this morning. https://t.co/Nsqlkwo0Zb

12.53pm BST

The European Bank of Reconstruction and Development has also warned that Greece would be plunged into a major recession if it defaulted on its debts, hurting economies across Eastern Europe.

these forecasts would be rendered completely invalid in a negative scenario of missed sovereign debt payments, capital controls, limits on deposit withdrawals and the possible introduction of IOUs ("pseudo euros") or equivalent instruments to pay domestic obligations.

In this case, Greece would likely fall back to a major recession, the size and duration of which are difficult to quantify now.

12.33pm BST

The European Bank for Reconstruction and Development has worrying news for Russia and Ukraine today.

Russia itself is expected to suffer a significant recession with the economy shrinking by 4.5% percent in 2015 and by close to two per cent in 2016. The country may face a protracted period of slow growth or stagnation. Low oil prices and sanctions have taken their toll on an already weak economy with deep-seated structural problems.

The economic disruption in the east of the country, the negative impact of the depreciation of the hryvnia, tight economic policies, energy tariffs hikes and a continued contraction of credit are expected to maintain pressures on the economy this year.

11.58am BST

Now here's a funny thing. Shares in a Canadian banknote printing firm have soared this month, amid rumours that it has a deal with Greece to produce a new currency if it left the eurozone.

Shares in Vancouver-based Fortress Paper jumped from 2.30 Canadian dollars to over C$4 this week, before dipping back to C$3.75 last night.

Fortress said Tuesday it doesn't know why its shares are climbing, and chief executive officer Chadwick Wasilenk declined to comment when a Bloomberg reporter cornered him.

Meanwhile, some 6,000 miles from Athens, a banknote printing company in Vancouver ... MT @BV Depositors flee Greece http://t.co/WzkQxjrFIn

11.35am BST

Updated @Reuters story makes clear @yanisvaroufakis talked bond swap, not ECB payment delay http://t.co/mHKXmHXDWj pic.twitter.com/GNkEJJ4NbX

11.26am BST

Elsewhere in Greece today, the deputy defence minister has reignited speculation that a referendum could be held.

Kostas Isychos insisted that Greece will not oblige foreign lenders by simply crossing its "red lines," .

"It [the referendum] is something that is still on the table. Leftists have to decide what kind of Europe they want."

11.21am BST

Idea of ESM buying out #Greece's SMP bonds at ECB is not new. My idea too since mid-2014. The catch: ESM needs MoU + conditionality

11.18am BST

I must confess I'm a little confused about exactly what Yanis Varoufakis is proposing about Greece's bond repayments.

"How could this be done? Through a swap. The idea of a swap between the Greek government and the ECB fills Mr. Draghi's soul with fear. Because you know that Mr. Draghi is in a big struggle against the Bundesbank, which is fighting against QE. Mr. Weidmann in particular is opposing it."

10.58am BST

Key clarification. Initial comments seemed to suggest pay delay MT @yanisvaroufakis: I spoke of possible ESM-mediated repayment of ECB GGBs

10.56am BST

Greek Govt says more talks due with creditors in Athens tomorrow.

10.55am BST

Yanis Varoufakis has just turned to Twitter to insists he's not refusing to repay the European Central Bank:

I spoke of a possible ESM-mediated repayment of ECB's SMP GGBs and some journos report I announced....nonpayment. Astonishing propaganda!

Over July-August the finance ministry will have to borrow a6.7bn from our partners in one way or the other to repay bonds from the SMP programme.

"About a27bn of those bonds are still left, which should be repaid in the next months or years. These bonds should be pushed back to the distant future. This is clear."

10.37am BST

The pound has hit a new near-six-month high this morning, hitting $1.58 against the dollar for the first time since November.

GBPUSD enjoying its best 5 days since October 13-17th 2009 pic.twitter.com/ixf4YBVStG

Better chart of that GBPUSD outperformance here pic.twitter.com/pzkJzx02Hx

10.32am BST

Greece's prime minister appears to have rolled out his best summer suit to welcome a group of visitors from the US.

Meeting now with representatives from AHEPA. We value the diaspora's support. #Greece pic.twitter.com/wpFLkfulNC

10.26am BST

Over to the markets. After a weak start, the FTSE 100 is now flat this morning as traders take a breather.

Other European markets are up, welcoming the fact that bond markets are calm after some wild days recently.

10.19am BST

Credit Agricole's Fred Ducrozet reckons that Greece has no hope of persuading the ECB to let it delay repaying a6.7bn of maturing debt.

http://t.co/vapRbf9AC5.Happen. https://t.co/l04HFTWk6C

10.06am BST

Delaying Greece's ECB repayments would effectively be a debt restructuring, points out ING economist Carsten Brzeski:

Debt restructuring here we come...acc to Bild, Varoufakis wants to delay reimbursement of maturing Greek bonds held by ECB.

9.57am BST

Mario Draghi will get the chance to respond to Yanis Varoufakis's comments this afternoon, when he gives the Michel Camdessus Central Banking Lecture in Washington.

#Draghi speaks today at 3pm GMT at IMF central banking lecture. He might also use the stage to comment on recent QE market jolts & #Greece

9.38am BST

Yanis Varoufakis has also argued that Greece shouldn't meet the a6.7bn of debt repayments it owes the European Central Bank this summer.

He told the Economist conference that Greece's debts aren't viable, and that those ECB repayments should be kicked into the long grass.

"Over July-August the finance ministry will have to borrow 6.7 billion euros from our partners in one way or the other to repay bonds from the SMP programme," Yanis Varoufakis told a conference in Athens, referring to bonds bought by the ECB under the Securities Market Programme over 2010-2011.

"About a27bn of those bonds are still left, which should be repaid in the next months or years. These bonds should be pushed back to the distant future. This is clear."

Greece's debt repayment schedule. #debt #grexit #default #ecb #europe #greekcrisis #reforms pic.twitter.com/kyeJVxLrLR

9.16am BST

Yanis Varoufakis, the embattled Greek finance minister, has just sparked fresh speculation over his future.

"As finance min I refuse to put my signature to a package .. if it proves mathematically that it doesn't add up," says #YanisVaroufakis

9.08am BST

Over in Athens, Greece's finance minister Yanis Varoufakis is addressing a conference organised by the Economist.

Helena Smith reports:

In a speech that is likely to be dominated by a Q & A session, the Greek finance minister started out saying that "if Greece doesn't reform it will sink" after explaining why the ongoing negotiations were "so marathon."

"We all agree that Greece should not suffer the indignity of [excessive primary surpluses]."

9.05am BST

And here's exactly what Mark Carney said about the risks that uncertainty over the EU referendum poses, via ITV News.

We talk to a lot of bosses and there has been an awareness of some of this political uncertainty - whether because of the election or because of the referendum.

What they've been telling us, and we see it in the statistics, is they have not yet acted on that uncertainty - or to put it another way, they are continuing to invest, they are continuing to hire.

Mark Carney: EU in-out referendum 'should happen as soon as necessary' http://t.co/3xbkGVg8RY pic.twitter.com/AsteRFlCPD

8.58am BST

Mark Carney has done his best to take the string out of today's Daily Mail front page splash, saying he blamed foreign workers for "dragging down wages"

As he explained, at some length, to John Humphrys, net migration is only one factor in the complicated puzzle of why UK productivity has been so weak.

Carney still irritatingly (for journalists) unrattleable and on-message. Dampening only vaguely controversial comment(on migration)from yday

Humphrys immigrant shaming on #r4today as he talks to Mark Carney who is himself an immigrant.

Anyone remember forward guidance? Carney's language on the path of rates now firmly back in the King-era. #r4today

"It's in the interests of everybody that there is clarity about the process and the question and the decision...

The government has made it clear that it is a priority. I am sure the government will act with appropriate speed in developing the negotiations."

Mark Carney gets within a fag paper's width of calling for a referendum sooner rather than later on #r4today

8.34am BST

Mark Carney also cautions against assuming that the UK economy recovery will be smooth and simple.

We face a weak global economy, the impact of fiscal consolidation [George Osborne's deficit reduction plans], and the challenge of completing the repair of the financial system.

8.33am BST

The next interest move will probably be up, Carney adds, and it's "possible" that rates will be higher in a year's time.

8.30am BST

Onto general economic issue, and Carney says that interest rates will rise in a gradual manner, when the time comes....

8.30am BST

Is the Bank of England worried that a referendum on Britain's membership of the EU will cause uncertainty and hit business confidence?

The Bank doesn't believe that businesses have yet acted on the uncertainty.

Mark Carney wants an EU referendum "as soon as necessary". Presumably some sort of Canadian idiom. #r4today

8.26am BST

As businesses run out of labour, productivity should go up, says Carney.

But you've been predicting a rise in productivity for years...

8.20am BST

But there are 4.8m foreign workers in the economy, isn't that pushing down wages and productivity, asks Humphrys.

Mark Carney explains that foreign workers usually enter the labour market in jobs which are below their skill set. Over time, they rise up through the workforce, take on more high-skilled jobs and contribute to rising productivity.

8.16am BST

Humphrys asks if foreign workers are to blame for Britain's poor productivity growth.

"I'd really dampen that down", Mark Carney replies.

The real story is that British people want to work more.

8.13am BST

John Humphrys asks if it's true that households would be 5000 per year, after tax, if productivity had grown at the pre-crisis rate.

Wages would be higher in the "high teens", Carney agrees.

8.12am BST

Governor Carney is on the Today Programme now....

It is the key determinant for wages and living standards in the UK.

8.10am BST

@bankofengland Gov Carney on R4 shortly. http://t.co/e4F1F6Dvu3 inflation, interest rates and productivity. Will they ask about DOJ + fx?

8.03am BST

You can listen to the Mark Carney interview live, here.

8.02am BST

Mark Carney is likely to be quizzed about migration when he is interviewed on the Today programme in a few minutes.

Yesterday's Bank of England Inflation Report identified net migration as one factor that has pushed down wage growth; the comment made the front page of the Daily Mail:

Thursday's Daily Mail front page - Bank chief: foreign workers drag down UK wages #tomorrowspaperstoday #bbcpapers pic.twitter.com/Z3XbOhbhJO

In recent years labour supply has expanded significantly owing to higher participation rates among older workers, a greater willingness to work longer hours and strong population growth, partly driven by higher net migration. These positive labour supply shocks have contained wage growth in the face of robust employment growth.

Wages have grown by around 2% in the past year - less than half the average rate before the global financial crisis - and a key risk is that these subdued growth rates continue.

7.56am BST

Last night's Greek cabinet meeting focused on changes to the tax system, and possible privatisations, ahead of today's talks with creditors today.

The Kathimerini newspaper adds:

Officials also discussed the possible timing for drafting some of these changes into legislation in a bid to show good will and convince the European Central Bank to relax liquidity restrictions on Greece.

7.53am BST

Greece's government has instructed its negotiating team to speed up the talks with its lenders, in an attempt to bridge the gaps before it runs out of funds.

Greece's negotiating team will continue talks with the country's international creditors to reach a cash-for-reforms deal, a government official said after a cabinet meeting chaired by Prime Minister Alexis Tsipras.

"The cabinet authorised the negotiating team at the Brussels Group to continue talks starting on Thursday, aiming at a mutually beneficial agreement," the official said.

Greek govt authorised team in Brussels Group to achieve 'mutually beneficial agreement'. That's it #Greece #Eurogroup

7.47am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Related: Bank of England lowers forecasts for UK

#IMF's Lagarde & #ECB's Draghi to meet in Washington today + IMF Executive Board to be briefed on #Greece by Europe Dept head Poul Thomsen .

"The bond market moves are making investors quite anxious. I think everyone expected yields to rise once we started to see a bounce in oil prices as, naturally, this would change people's inflation outlook...

"The pace at which they've risen has been quite surprising, which is probably a consequence of a lack of liquidity in the market at the moment. A small change in attitude can have a much greater impact."