06 MAY 2011
By Stephanie Flanders | BBC News
Jean-Claude Trichet was more dove-ish than expected in his press conference today after the European Central Bank's (ECB) latest meeting. The city was surprised, but Mario Draghi may come to be grateful.
You might not have taken Trichet for a dove, listening to his stern words about the "upside" risks to inflation. But in the strange world of ECB-watching these days, it's not what is said, but the precise words that are used to say it.
To give a sense where this has got to, let me quote part of a note from Barclays Wealth, explaining why the ECB president's opening statement suggested that a June rate rise was not on the cards after all. (This is no dig to the author - I've received plenty of similar emails since Mr Trichet sat down.)
"The ECB's introductory statement did not include the phrase "strong vigilance". It did refer to conditions being "still accommodative". We had expected "very" accommodative to be used (as opposed to plain "accommodative" last time), and were not (on balance) expecting use of the phrase "strong vigilance".
In our view, the use of "still" here is much the same as re-insertion of "very" would have been: it implies that the expression can be revised to "vigilance" at the next meeting on 10 June. We continue therefore to look for a 25bp rate increase at the 7 July policy meeting, with this signalled at the 9 June meeting by using the word "vigilance"."
So, I hope that's clear.
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