Draghi delivers 'balancing' act on inflation

Between a finalised Greek debt negotiation and euro group summit taking place this afternoon, European Central Bank governor Mario Draghi gave a speech described as ‘constructive’ by top fund managers.

Price developments ‘remain broadly balanced,’ Draghi said in Frankfurt after the ECB announced it would keep rates on hold at the record low of 1% for another month.

The governor appeared more ‘proactive and constructive’ compared with his predecessor Jean-Claude Trichet, said Stefan Isaacs manager of the European Corporate bond fund and High Yield Corporte bond fund at M&G Investments.

‘If they were behind the curve on price stability then they are certainly picking up to address and balance the credit environment,’ Isaacs, who oversees over €2 billion, told Citywire Global.

The ECB also announced its approval of eligibility criteria for additional credit claims. The announcement means more types of bank collateral will be accepted in the ECB’s second long term lending programme in March.

‘The additional collateral rules for LTRO are not a great surprise,’ Simon Chester, portfolio manager at American Century Investments said. ‘The ECB is doing all it can within its ambit for the banks.’

Draghi declined to comment on whether the ECB would participate, as a bond holder, in sharing losses on Greek government debt.

Luca Pesarini, who oversees 2.5 billion euros at ETHNA funds told Citywire Global before the announcement he didn’t expect the ECB to keep rates at 1% ‘for very long’ if left unchanged at this month’s meeting.