Draghi Rebukes Lagarde And Is Weidmann Going Soft?

Thanks a Bunch, but Keep the Advice to Yourself Please …

The most amusing moment of Mr. Draghi’s press conference after yesterday’s ECB board meeting, was when he proceeded to put down the IMF’s Ms. Lagarde who had only one day prior to the meeting admonished the ECB to step up its money printing efforts so as to counter allegedly ‘too low’ inflation (see “Lagarde Worries About ‘Not Enough Inflation’ Again”).

The ECB once again left policy unchanged, instead continuing to rely on threats and/or promises (depending on whether one is a saver or a debtor, one can interpret its announcements as either one or the other) of what it woulddo if ‘required’. As the WSJ reports, Draghi actually looked ‘cross’ for once, seemingly losing his usual detached cool. We think it’s just theater, but anyway, here is what the WSJ wrote:

“For a moment Thursday, European Central Bank President Mario Draghi, arguably one of the coolest, most collected central bankers on the planet, looked cross.

Mr. Draghi was explaining to reporters why the ECB’s governing council had decided to take no action in response to a decline in the inflation rate to 0.5%, a quarter of the rate it targets. It’s a job he does well, and indeed, by the end of the monthly news conference, Mr. Draghi had managed to convince investors that the central bank may yet loosen policy further, as evidenced by the fact that as he left the podium, the euro was weaker than before he had started.

But along the way, Mr. Draghi was asked one question that appeared to set him on edge: how did he respond to a suggestion by the head of the International Monetary Fund Wednesday that the ECB should loosen policy, and quickly?

With a little sarcasm, is the short answer.

“I think the IMF has been of recent extremely generous in its suggestions on what we should do or not do,” he said. “And, we’re really thankful for that. But the viewpoints of the Governing Council are in a sense different. Frankly, I would like the IMF to be as generous as they have been towards us also with other monetary policy jurisdictions, like for example issuing statements just the day before an FOMC meeting would take place. Anyway, I think we would certainly value the advice of the IMF and certainly it’s an important contribution to our analysis.”