23 October 2003

EZA 563 ECB-Monetary

Quiet ECB presidency handover; further 2003 rate moves unlikely
Only a few days before the handover of the European Central Bank to a new president for an eight-year term it is a truism to assert that the institution is in a state of flux. But the much-vaunted 'ECB In Motion' review of internal procedures has ended without producing much of substance. A departure party for outcoming President Wim Duisenberg was held yesterday in Frankfurt. Staff are ready for a change. They are waiting with high curiosity to see what style Banque de France Governor Jean-Claude Trichet will bring to the institution when he takes over on Nov. 1. As well, the debate in Paris over the succession to Trichet at the BdF (EZA rpt 560/03Oct7) was finally resolved by the French Cabinet decision yesterday to name former ECB Vice-President Christian Noyer - despite irritation over his remarks in spring. BdF deputy governor Hervé Hannoun was ruled out of the running mainly by his past political affiliations. Amid this internal institutional hiatus, no ECB monetary policy action whatsoever is being seriously ancipated for the foreseeable future - which means at least into 1Q04. Unless euro/dollar rises fast this seems justified.

SummaryAsset Conclusions: Little likelihood of any more ECB monetary moves this year amid presidency succession - despite union pressure for growth boost.

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© Graham Bishop