Draghi Holds Off on Monetary Policy Clues, Criticizes Deregulation Push -- Update
JACKSON HOLE, Wyo. -- European Central Bank President Mario Draghi offered no fresh clues on when the ECB might wind down its giant bond-buying program in a much-anticipated speech Friday, kicking back the discussion until at least next month.
Instead, Mr. Draghi criticized a global tilt toward protectionism, and warned against loosening postcrisis financial regulations, pushing back against key parts of the policy agenda of President Donald Trump.
Mr. Draghi's decision to eschew fresh policy hints, following the example of Fed Chairwoman Janet Yellen earlier in the day, comes ahead of meetings next month at which both the Fed and ECB could signal they will roll back easy-money policies adopted since the financial crisis.
Central bank chiefs "opted for coordinated silence at Jackson Hole," said Lena Komileva, chief economist at G+ Economics in London. "The pressure lies overwhelmingly on forthcoming policy announcements in September to guide market direction for the rest of the year. This means several critical months for the markets ahead."
At the Federal Reserve's annual late-summer retreat, Mr. Draghi said the ECB's EUR60 billion-a-month ($71 billion) bond-buying program had been "very successful," but said a "significant degree of monetary" stimulus was still needed to support the 19-nation eurozone economy.
That echoes the language used by the ECB chief after the bank's latest policy meeting in July. Still, the euro jumped to a 2 1/2 -year high of $1.1930 against the dollar after Mr. Draghi failed to discuss the single currency's recent strength. Traders took that as an invitation to buy it, betting that ECB officials don't object to the euro's current level.
Investors are watching closely for any signal that the ECB will start winding down its so-called quantitative-easing program, which is due to run at least through December. Mr. Draghi has said policy makers will discuss the future of QE in the fall, which includes its next policy meeting on Sept. 7. Markets also expect a move soon by the Fed to start reducing its $4.5 trillion balance sheet.
"The demand for an ECB game plan on tapering [winding down QE] will only get stronger and Draghi will have to address it," said Carsten Brzeski, an economist with ING in Frankfurt.
Mike Bird in London contributed to this article.
Write to Tom Fairless at tom.fairless@wsj.com and Kate Davidson at kate.davidson@wsj.com
(END) Dow Jones Newswires
August 25, 2017 17:12 ET (21:12 GMT)