Draghi was combative and congratulatory
1. No ignoring the improvement
Draghi had no choice but to recognize the better tone in markets and also used the opportunity to put himself on the back.
"Overall, the monetary policy measures in place since June 2014 have clearly improved borrowing conditions for firms and households, as well as credit flows across the euro area," he said in the ECB introductory statement.
He even linking trouble in financial markets earlier in the year and the subsequent improvement to ECB policies.
2. Lending is better
Draghi highlighted better lending and borrowing data. Many of the ECB actions over the past two years were justified because lending conduits were closed or clogged. Whether opening them up was a result of time and animal spirits or ECB action is mostly irrelevant. If the money is flowing,
3. Draghi preaches patience
Draghi hinted that no more action is coming unless financial conditions and the inflation outlook deteriorate. He also continued to leave himself plenty of breathing room by repeating that inflation is likely to turn negative later this year before rising near year end. So unless there's some kind of shock, the ECB is likely done.
Draghi even asked for patience which is a sign he believes the actions announced last month will be enough, if given time. "ECB policies are working, just give them more time," he said.
One area where his patience is waning is on the fiscal and structural side. He urged governments to do more and I suspect that will be a big part of the near-term ECB playbook.
