The press conferences after the meetings of the governing councils of the central banks are very informative. The answers, suggestions or even the body language of the representatives of the highest monetary authority are observed by analysts and journalists in order to identify what may happen in the coming months. The previous president of the European Central Bank, Mario Draghi, was a wizard of communication – among many other virtues – and applied his spell on the markets in the form of credibility. His famous phrase “whatever it takes” stopped once and for all the bleeding of brutal speculation against the euro and against the sovereign debt of peripheral European countries. Perhaps we have lost something in those press conferences with his successor, Christine Lagarde, with different skills than Draghi, although the environment and problems are now different. Interpreting her messages involves incredible scrutiny. In fact, for years now, artificial intelligence has even been used to try to unravel patterns that are not intentionally under human control, but with which monetary leaders can reveal more than they intend.
On March 7, the ECB’s governing council decided to keep the three rates unchanged. It may have seemed like a bland meeting, but a few brief comments from Lagarde sparked attention. It was a somewhat indirect statement in the best style of his predecessor (Mario Draghi). He generated an expectation that there would be rate cuts starting in June and not before. The president stated: “We know that these data will arrive in the coming months, we will know a little more in April, but we will know much more in June.” Much had been said about the need to reactivate the euro economy – more weakened than that of other latitudes – with a stimulus such as a rate cut. Lagarde cooled the waters on an immediate decision, but let it be known that there is not much left (in June). A double message in a sentence that reconciled two missions that were hardly compatible. On the one hand, he was helping to further cool inflation by explaining the delay in lowering rates. On the other hand, he generated an expectation for the reactivation of economic activity by suggesting that in three months the lowering of the price of money will begin. This can positively affect investor sentiment from now on.
The words were May water. They toned down the harsher tone of the Governing Council’s official statement that, in view of existing projections, there are still wage pressures on underlying inflation, and future decisions by the Governing Council will ensure that official interest rates remain unchanged. set at sufficiently restrictive levels for as long as necessary. Lagarde gave confidence to the economy, because in three months it seems that the cost of financing will be reduced. Few words, a lot of impact.