Mario Draghi is preparing for his final monetary policy meeting at the European Central Bank on Thursday — but the controversy over his legacy will rage on.
The 72-year-old Italian economist, who will hand over to Christine Lagarde at the end of this month, is unlikely to announce any changes to eurozone monetary policy after the governing council meets. But he is set to face plenty of pressing questions.
The debate about ECB strategy has intensified since it responded to falling growth and inflation last month by cutting rates further into negative territory and restarting its bond-buying programme.
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That decision widened divisions in the top echelons of the ECB. Investors hope to hear Mr Draghi’s valedictory assessment of what this split means for future monetary policy decisions, as well as any further detail on the package.
Here are five important themes to watch out for on Thursday.
Will the ECB take any fresh action? After last month’s ruckus — particularly over its open-ended commitment to restart its €2.6tn bond purchase programme from next month — Mr Draghi is widely believed to have fired the last of his monetary policy bullets.
Oliver Rakau at Oxford Economics said: “After Mario Draghi rammed through his comprehensive easing package against some vocal opposition at the last council meeting in September, there is no prospect of any major policy decision at the upcoming meeting.”
Investors expect Mr Draghi to spend much of his time explaining and justifying last month’s decisions, particularly by pointing to signs that the eurozone economy has continued to weaken in the six weeks since.
“This ECB meeting will offer an opportunity for Mario Draghi to put the ECB’S monetary policy into perspective,” said Franck Dixmier, global head of fixed income at Allianz Global Investors.
Can the ECB heal its recent divisions?
The fallout from the last ECB meeting has been spectacular by central banking standards. The heads of the German, French, Dutch and Austrian central banks all publicly came out against parts of the package, which was decided against the advice of the central bank’s own officials and was attacked by a group of retired ECB grandees.
