The European Central Bank is the central bank of the European Monetary Union member states. The ECB adheres to an inflation target of two percent. Because the ECB is a new central bank that needs to prove itself in financial markets, and because of its institution ties to the German Bundesbank which has historically preferred to err on the side of caution, the ECB is unlikely to risk high inflation in exchange of economic growth.

The ECB president is the voice of the bank and his speeches provide the international investment community with insight into ECB monetary policy. When the President speaks, market participants pay close attention to a number of areas.

Markets focus on what the bank deems as key points that could suggest future interest rate changes. For example, if the speech states that the economy is suffering from high unemployment and stagnant growth but inflation is under control, then financial markets may expect the back to keep rates unchanged to promote growth. Markets will also monitor unemployment and growth in the upcoming period in order to gauge the likelihood of a rate change to come.

Markets also focus heavily on the language used in the President's speech. If the President's is cautious about the inflationary outlook for the economy ("Hawkish"), then the market sees a higher likelihood of future rate increases. Optimism in the President's outlook ("Dovish") would suggest to markets that inflation is in check and that future rate increases are less likely, with the possibility of declines in rates.

Relevance: Tends to move markets on release
Release Schedule : No set time for speeches
Source of Report : European Central Bank
Web Address : http://www.ecb.int/home/html/index.en.html
Address of Release : http://www.ecb.int/press/key/date/previous/html/index.en.html