ECB’s Draghi takes up new weapon in war on deflation

Runners have target times, golfers judge themselves by their swing, while Mario Draghi watches a technical measure of inflation expectations used by financial markets.

Just one problem: it suggests the European Central Bank president is not achieving his objective – and that markets’ fears of eurozone deflation are mounting.

Since late August, investors have focused on a financial gauge previously watched only by specialists – the “five-year, five-year euro inflation swap rate”. That is the average level of inflation that swaps prices imply over five years starting in five years’ time. Inflation swaps are used to protect investors against inflation.

Mr Draghi had highlighted the inflation swap rate when he addressed a global summit of central bankers in Jackson Hole, Wyoming. In a big hint of a fresh ECB effort to stimulate eurozone growth, he noted that the gauge had fallen sharply.


Related Posts

  • 85
    Mario Draghi has set the bar high for the European Central Bank’s next meeting Thursday. The bank president’s warning about reduced inflation expectations, made in a speech on Aug. 22, fanned hopes that the ECB may announce additional stimulus measures to boost economic growth and prices. A report Friday showing…
    Tags: ecb, bank, draghi, inflation, fears, deflation, target, expectations, president, central
  • 83
    European Central Bank President Mario Draghi hoped never to see this moment: Consumer prices in the euro region have dropped by 0.2 percent, according to December figures just published: Deflation -- a sustained period of falling prices that discourages consumers from spending and businesses from investing -- threatens to worsen the…
    Tags: euro, prices, draghi, deflation, target, inflation, mario, president, european, central
  • 83
    Press conference following the meeting of the Governing Council of the European Central Bank on 4 September 2014 at its premises in Frankfurt am Main, Germany, starting at 2:30 p.m. CET: Introductory statement by Mario Draghi, President of the ECB. Question and answer session. Registered journalists pose questions to Mario Draghi, President…
    Tags: ecb, mario, draghi, president, central, bank, european, starting
  • 81
    Though ECB cut  was covered by the Press in great details but only a few analyzed the results of such measure. Only independent writer/economists talked about the potential losers and winners of the situation. In this article featured in The Telegraph , an economic writer talks about critiques the actions of…
    Tags: ecb, global, rate, financial, measure, euro, takes, bank, central
  • 80
    The European Central Bank is poised to impose negative interest rates on its overnight depositors, seeking to cajole banks into lending instead and to prevent the euro zone falling into Japan-like deflation. At its meeting on Thursday, ECB policymakers may also launch a loan program for banks with strings attached…
    Tags: ecb, bank, euro, rate, central, inflation, expectations