The Mario show: The reviews are in

The euro jumped as much as 1 per cent against the dollar during Mario Draghi’s press conference, before falling back to roughly where it began the day. That reflects the fact that there wasn’t much to give it a firm shove in either direction. Here’s a round up of reaction to the ECB press conference from some of the keener central bank watchers.

Nordea Bank strategists said Draghi’s “dovish words aim at keeping easing expectations alive”, adding:

The signals were not enough to reverse the course for markets, so yields have more room to rise and the euro to strengthen in the near term. We continue to expect a further cut in the deposit rate and an extension of the asset purchases beyond March 2017.

Given that Draghi sounded slightly more dovish than in March, we stick to our call of a 10bp cut in the deposit rate in June, acknowledging the risk that this might come later. Another cut would be supported by a further strengthening of the euro, an additional fall in oil prices, weakening growth prospects, a desire to increase the attractiveness of the TLTROs and expanding the eligible universe of bonds in the asset purchase programme

Peter Schaffrik, chief European macro strategist at RBC said:

Draghi was slightly positive in that he said, at least three times if I counted correctly, that if anything goes wrong, the central bank still has tools available. That may help to correct the impression that he gave last time.

And added:

I’m a little bit surprised that the ECB announced the details of its corporate bond-buying programme.

Frederik Ducrozet at Pictet Wealth Management says:

The ECB’s assessment of macroeconomic conditions has not changed materially in the past few weeks, with the view that existing and upcoming policy measures will all contribute to pushing inflation higher over the medium-term. In Draghi’s words: “ECB policies are working, just give them more time”.

Barring a new shock, we continue to rule out any major change in the ECB’s stance apart from a possible extension of asset purchases beyond March 2017 along with technical changes to QE rules – both of which could be announced around September 2016.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics writes:

Mr. Draghi noted, but downplayed the risk from slow growth in emerging markets and low oil prices. Instead, the president focused on the chaos in financial markets earlier this year, which the president linked specifically to the announcement of additional easing.

Mr. Draghi made several references to “financial conditions” and how the latest policy measures have contributed to their improvement. This suggests that the governing council is now more confident that inflation will rise gradually, but also that it wants to guard against a deterioration in financial conditions which could hurt or even reverse the fragile cyclical recovery.

Mr. Draghi also increased his emphasis on the need for “other policy” areas to contribute to the recovery, focusing on public investment and lower taxes, financed by a reduction in government expenditure. This is the first time, as far as we can remember, that the president has been this specific in his views on fiscal policy.

Also honing in on Draghi’s calls for help from fiscal reforms, Neil Mellor at BNY Mellon says:

Once more returning to recent criticism levelled at the ECB, Draghi reiterated calls for regional governments to complement the Bank’s existing measures with reform; and although Draghi has previously called for fiscal policy to make a more effective contribution to growth (last October he said that monetary policy “should not be the only game in town”), today the ECB President emphasised that any efforts on this front should be compliant with the EU’s fiscal deficit criterion, thus aligning his views with those recently expressed by Merkel/Schäuble.

Howard Archer at IHS writes:

The impression coming from the ECB is that it is now very much in “wait and see mode”, but is prepared to take further action if deemed necessary. At the same time though. Mario Draghi stressed the importance of other policy action across the Eurozone to boost growth with structural reforms to boost productivity essential.

And on the euro, he adds:

While Mr. Draghi stated in answer to a question that the ECB does not have a foreign exchange target, the strong suspicion is that the ECB would like to see the euro soften (it has traded at a 5-month high of $1.464 recently). It seems notable that Mr. Draghi highlighted that “ECB monetary policy course will continue to diverge from that of other jurisdictions.”