Second year of interest rate stasis frustrates ECB hawks
For much of its short history, the European Central Bank, perched in one of Frankfurt's highest skyscrapers, has huffed about inflationary dangers, earning itself a reputation for monetary hawkishness.
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But in a feat rare even in the stable world of central banking, the European Central Bank will next month mark two years since its last interest rate change. And with the eurozone economy slowing again, few expect action any time soon.
Financial markets point to a quarter percentage point increase only in the second quarter of next year making a third anniversary of no change a distinct possibility.
For Mark Cliffe, economist at ING bank, the ECB has become a nest for “frustrated hawks”. Julian Callow, at Barclays Capital, describes the bank's policymakers as “hawks on ice”.
The long period of inactivity the ECB last week again left its main rate at 2 per cent highlights how, for all the central bank's monetarist instincts, the weakness of European growth is proving more important to the ECB than fears of a possible asset bubble or its desire to follow the US Federal Reserve in moving rates back to more “normal” levels.
Jonathan Hoffman, economist at Royal Bank of Scotland, says the ECB “is extremely firmly on hold”. An economist at a well-known bank quips that the inactivity is putting European economists out of a job. Even ECB insiders joke that their families ask them what they do all day. Official rates have been zero in deflation-ridden Japan for years. Central bank watchers have to go back to the early 1960s to find a comparable period of interest rate stability in the US.
However, the ECB, which took over responsibility for eurozone monetary policy in 1999, has some way to go before it matches the three years and eight months of unchanged rates notched up by Germany's Bundesbank before it offered financial markets something to talk about in January 1965.
Last year, the talk was of a possible ECB rate rise by the end of 2004, then the favoured date slipped into 2005. Now any change appears to have been pushed even further into thefuture by a string of disappointing economic figures. Dirk Schumacher, economist at Goldman Sachs, says the ECB's inactivity partly reflects the way its 18-strong governing council operates on a European-style consensual basis. “When there is a change in stance they require a strong majority, which results in more inertia than in other central banks.”
But a more important reason for its inaction has been the weak data. Eurozone gross domestic product figures this week covering the first three months of this year are expected to show a rebound after a weak second half of 2004. But more recent business and consumer confidence surveys have pointed to a marked slowdown in the second quarter of 2005.
German industrial production data for March yesterday came in below expectations, and a slowdown in the UK and US would further dim eurozone export prospects. Meanwhile, eurozone inflation shows little sign of wandering significantly from the ECB's definition of price stability a rate “below but close” to 2 per cent.
One hope for ECB excitement would be if the central bank responded to demands from politicians in Germany and Italy for a cut in rates to boost growth.
Jean-Claude Trichet, ECB president, attempted to rule out such a move last week, describing a cut as “not an option”. The ECB believes lower interest rates would add to the problem of excess liquidity in the eurozone, without boosting growth and its preference is to raise rates as soon as possible.
But some economists do not quite believe Mr Trichet. Goldman Sachs is still predicting a cut.
Otherwise the consensus view is that the ECB will not be able to indulge its hawkish instincts and raise rates until an economic recovery has become self-sustaining.
Mr Callow says an interest rate at the historically low level of 2 per cent was originally intended as an “emergency oxygen supply” amid fears of global deflation. “Since then, however, it has become clear that the patient needs a lengthy convalescence with the pure oxygen supply maintained.”
In a research note last week, economists at ABN Amro argued that “the ECB attaches more weight to economic activity and less weight to current inflation and monetary developments than markets usually assume”.
ABN Amro is predicting that ECB interest rates will remain unchanged until at least the end of 2006. But the Dutch bank has not yet been brave enough to predict a fourth anniversary of no change. Short View, Page 15
欧洲央行“无为而治”
欧洲央行(ECB)位于法兰克福最高的摩天楼之一。在它短暂的历史中，大部分时间都在散发通胀警告，由此获得“鹰派”货币政策的名声。
到下个月，距欧洲央行上一次调整利率已过了整整两年。这样的成绩，即便是在稳定的央行体系中也颇为罕见。随着欧元区经济再次放缓，几乎没有人预期欧洲央行会在近期采取任何行动。
金融市场的迹象显示，直到明年第二季度，利率才会提高0.25个百分点。这就可能实现利率连续三年没有变动。
根据荷兰商业银行(ING bank)经济学家马克?克里夫(Mark Cliffe)的说法，现在的欧洲央行已成为“受挫鹰派”的老巢。巴克莱资本(Barclays Capital)的朱利安?卡洛(Julian Callow)将欧洲央行的决策人描述成“冰面上的老鹰”。
最近，欧洲央行再次将其主要利率定为2%，这样长时间的静止状态突出表明，即便欧洲央行具备货币主义者的本能，但它对欧洲经济增长乏力的担忧，超过了对可能存在的资产泡沫的担忧，也超过了它有意追随美联储(US Federal Reserve)，将利率调回到更“正常”水平的愿望。
苏格兰皇家银行(Royal Bank of Scotland)经济学家乔纳森?霍夫曼(Jonathan Hoffman)表示，欧洲央行目前“非常坚定地保持暂缓状态”。某著名银行的一位经济学家讽刺说，这种停
