–Retransmitting Story that Ran On Mainwire At 1544 GMT/1044 ET Friday
By Johanna Treeck
FRANKFURT (MNI) – Objections by three European Central Bank
Executive Board members, including President Mario Draghi, and by
Bundesbank President Jens Weidmann scuttled a rate cut that was favored
by a significant majority of the ECB’s Governing Council at Thursday’s
monetary policy meeting, a well-placed Eurosystem source told MNI on
Friday.
The source said that along with Draghi and Weidmann, Board members
Joerg Asmussen and Benoit Coeure also opposed cutting rates. The other
18 members of the Council either favored easing interest rates or at
least refrained from actively opposing such a move. The debate within
the Council came just hours before the ECB released new staff forecasts
showing sharp downward revisions for growth and inflation in the
Eurozone.
On Thursday, the ECB decided to leave interest rates unchanged at a
record low of 0.75%. “There was a wide discussion but, in the end, the
prevailing consensus was to leave the rates unchanged,” Draghi said in
the press briefing that followed the meeting.
Draghi’s own personal opposition to reducing the main refinancing
rate, at least in the near term, may explain why he appeared to dampen
rate cut speculation by describing the ECB’s current monetary policy as
“accommodative” and “very accommodative.”
Governing Council member Jozef Makuch, head of the Slovakian
central bank, said Friday that the Council had a “very serious” debate
over cutting interest rates. “Unless the situation improves
significantly, and there is a relatively small chance there will be a
significant improvement, it is possible to expect a move on interest
rates next year,” Makuch said.
–Frankfurt Newsroom, +49-69-720-142; jtreeck@mni-news.com
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