The meeting of the ECB’s Governing Council was last Thursday hosted by Slovenia, but the procedures were the usual. Compared to last month’s meeting, however, where everything was about fiscal policy, the very first question at the press conference actually dealt with monetary policy. Triggered by the (expected by most) decision to keep policy rates unchanged, a reporter asked:
Two short questions, Mr Draghi. The first one: you mentioned downside risks to the economy again. Have there been any discussions today about a possible rate cut in the months to come?
And the second one on Spain: do you find Spanish bond yields appropriate at the moment or are they still hampering your monetary policy transmission?
These are two fundamental questions on monetary policy, and on how the ECB views the monetary transmission mechanism (as its alleged disruption is what made the ECB initiate the OMT). Draghi’s answer was short:
On the first question the answer is no and on the second question, I will not comment.
If the first part of the answer was a way of signaling a commitment to low rates for a long time, it could have been done more elegantly and more transparent. The second part of the answer was strange. Draghi does not say that he does not know, is uncertain, or something else, which would have been understandable. He just refuses to answer.
This does not provide further insights to those who could suspect that the constant talk of a hampered transmission mechanism and the need for “singleness” in monetary policy is a veil needed for engaging in bailouts of countries in fiscal distress.
It was therefore somewhat ironic that the next question (again on monetary policymaking!) dealt about publications of the minutes from the Governing Council meetings; i.e., dealt about the transparency of the ECB. In part to this issue Draghi responded:
What you have to keep in mind is that the ECB is already a very transparent institution; just think about this press conference every month.