Draghi faces maelstrom on debut as ECB president
By Paul Carrel
FRANKFURT (Reuters) - Mario Draghi faces a storm at his first policy meeting as European Central Bank president on Thursday but is unlikely to be pushed into a dramatic ramping up the bank's response to the escalating euro zone crisis.
European leaders said they were prepared for Greece to leave the euro zone to preserve their 12-year-old single currency if Athens does not decide quickly to implement a bailout program, putting the likes of Italy and Spain, and even France, firmly in the markets' sights.
Europe's ultimatum to Greece, after Prime Minister George Papandreou's decision to call a referendum on a bailout plan, has deepened the crisis and raised pressure on the ECB, which many analysts see as the only institution with the firepower to bring calm.
A change in interest rates is unlikely at the meeting of the ECB's 23-member Governing Council, which is now underway, just two days after Draghi took over the ECB presidency in the midst of a crisis that now threatens to engulf his native Italy.
More fundamental will be any indication Draghi gives about the ECB's bond-buying program.
Draghi succeeded France's Jean-Claude Trichet as ECB chief on Tuesday -- a day that saw the ECB buy Spanish and Italian bonds but barely manage to cap a rise in yields on the debt of the euro zone's third largest economy.
The premiums investors have to pay to hold Italian and French 10-year government debt over benchmark German Bunds rose to their highest in the euro era on Thursday with signs growing that the Greek government may fall.
Financial markets will be listening carefully to Draghi for any signals on whether he stands ready to carry on, or even scale up, the ECB's bond-buy program, a controversial tool that has led to the resignation of two German policymakers. Continued...