But the reaction to stimulus measures the central bank announced on Thursday – steps more timid than had been widely expected – suggested Mr Draghi, somehow, miscommunicated with the traders, pundits and prognosticators who set the course of financial markets.
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Derrick says it will be interesting to see how the Swiss National Bank reacts at its meeting on Thursday. Investor disappointment about the decision sent European stock markets to one of their worst days in months.
The bank cut its key deposit rate by a modest 0.10 percentage points to -0.3pc, and only extended the length of its bond purchase program by six months to March 2017. “We decided the extension of our horizon and especially the re-investment of principal would be sufficient”, he said. Especially if the market is correct in assuming that the range of assets available to the European Central Bank for purchases is shrinking.
The Euro Stoxx 50 index of eurozone blue chip stocks decreased 0.37 percent, while the Stoxx Europe 50 index, which includes some major United Kingdom companies, lost 0.59 percent.
Stock market moves were equally sharp.
Responding to reporters’ questions over possible future action and whether interest rates were now at their lower bound, Draghi said: “We are not going to be hampered in this by technical issues”.
“If markets expected another thing, that’s their view, but I would like to invite them to look…at the links between what we are doing and what is happening in financial markets and the real economy and to have confidence that these links will be reinforced by the measures taken yesterday”, Jan Smets said.
But it said those purchases would continue at a rate of 60 billion euros ($65 billion).
Most oil market participants appear to be holding to expectations the cartel won’t lower its 30 million-barrel a day output ceiling.
While leaving borrowing costs unchanged, the ECB lowered the rate on overnight deposits to minus 0.3 percent from minus 0.2 percent, effectively charging banks more to hold their money. So a lot of investors overbought bonds on expectations that Draghi would over-deliver.
Annual inflation across the 19-country currency bloc is now 0.1 percent, a long way from the ECB’s target of below, but close to, 2 percent over the medium term.
Indeed, business activity in the euro zone picked up at its fastest pace since mid-2011 last month, third quarter economic growth was running at a respectable 1.6 per cent and lending is increasing at the quickest rate in four years. At his traditional post-meeting news conference, Draghi conceded that the decisions had not been unanimous, but insisted they were carried by a “large majority”. The survey came in a bit stronger than analysts expected, and the government also said more people were hired in September and October than it had initially reported.
“The risk of deflation in the monetary area is firmly off the table”, Draghi said, emphasizing the word “firmly”.
Belgian central banker Jan Smets said he backed the decision by the ECB. “In the new world, and in the less liquid market we live in today, it takes one day for the repricing”.
Low inflation damages the economy in part by making it costlier for borrowers to repay their debts.
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Traders piled into the euro after the latest European Central Bank move – extending the timetable but not the scale of its €1.1 trillion money-printing programme – fell well short of market hopes.
