Mario Draghi of European Central Bank Faces a Monetary-Policy Tightrope
The bank’s Governing Council is unlikely to change policy after its meeting on Thursday,
but Mr. Draghi will have a difficult job when he faces the media at a news conference after the meeting: to gently prepare markets for the day the central bank will begin withdrawing stimulus, without provoking an overreaction.
press conference on Thursday will serve to show what a tightrope act the central bank now faces,”
Jörg Krämer, chief economist at Commerzbank, said in a note to investors this week.
For example, Mr. Krämer and others expect the central bank to omit a line from previous
statements about standing ready to increase bond purchases should conditions warrant.
Financial markets have been hypersensitive in recent weeks to anything that Mr. Draghi has said about plans to wind down central bank stimulus.
Yet the day will soon come when the European Central Bank begins tapering its purchases of government
and corporate bonds, the so-called quantitative easing it has been using to drive down market interest rates.