ECB President Takes a Victory Lap at his Press Conference

ECB President Mario Draghi held his monthly press conference today to report on the outcome of the day’s meeting of the Governing Council. He dialed down expectations that the ECB will do much more than continue to pledge to do whatever it takes to defend the euro. He first made that promise on July 26, 2012. The ECB subsequently set up an Outright Monetary Transactions (OMT) facility to buy the sovereign debt of troubled euro zone governments.

It’s worked like a charm without any actual purchases by the OMT! Draghi gloated about that at the press conference, noting that the ECB’s do-nothing approach to doing whatever it takes has worked much better than the activist QE policies of the other major central banks:

But, certainly, we have observed an increase in global volatility, coming from major monetary policy decisions or announcements of decisions that may be taken in the coming months. However, I do not think that the ECB has in any way been a source of this; I cannot really find any data to support this.

He proudly added: “OMT has been probably the most successful monetary policy measure undertaken in recent time.” I have to agree. It has been more like a stealth bomber than a bazooka.

Nevertheless, investors were expecting that something would be done to ease the credit crunch facing Small & Medium-Sized Enterprises in the euro zone. Draghi said that various “non-standard measures," including ABSs, have been discussed, but “these measures are all on the shelf.”

(Based on an excerpt from YRI Morning Briefing)