Stock market watching

From an interview with the President of the European Central Bank, Mario Draghi in the Wall Street Journal (WSJ) yesterday:

WSJ: What’s the first statistic you look at in the morning?

Draghi: Stock markets.

WSJ: Do you look at the euro exchange rate?

Draghi: Not in the early morning.

I am surprised that he did not mention the TED Spread or some other interest rate spread. And even within the stock market, it would appear that he is looking at market levels and not something like VIX. Are inflation targeting central banks actually closet asset price targeters?

Interesting to compare the Draghi quote with a controversial statement in the Indian parliament by former central banker, then finance minister, and future prime minister, Manmohan Singh in 1992:

But that does not mean that I should lose my sleep simply because stock market goes up one day and falls next day.

This provoked a retort from a parliamentary committee a year later:

It is good to have a Finance Minister who does not lose his sleep easily, but one would wish that when such cataclysmic changes take place all around, some alarm would ring to disturb his slumber

Posted at 2:44 pm IST on Fri, 24 Feb 2012         permanent link

Categories: equity markets, monetary policy

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