mr. draghi: you lifted it, we don't. [laughter] haven'thi: frankly, we -- what is being projected in are the projections tariffs that have been implemented already which are not -- don't have a very significant effect, he either on output or prices. completely different analysis would probably be where we haven't done it yet, where we will consider the tariffs announced since then first. , but atit's not easy some point we have to figure out what is the potential, the round of retaliation affects that is going to take place, and that is the most important thing -- what is the effect on confidence? what is the effect on business investment? what is the effect on experts? what is the effect on consumer confidence? we think there are lessons that one can learn from the past, and they are all very negative. it is not easy innocents to see what the consequences of monetary policy cap -- in a sense to see what the consequences of monetary policy can be. there is ground to be optimistic on that. the underlying inflation -- sorr

mr. draghi. he also talked about the impact a changing world is having on economic measurements, on models is it a difficult time to be a central bank governor? >> no question looking at the phillips curve, they have become much flatter in the last 30 years. that relationship between inflation and employment, it's not as strong as it was. there are different reasons for it people say it's automation other people say it's the impact of globalization and global supply chains. it's also how we calculate and measure inflation. that's not well understood in central banks or elsewhere so we have this conundrum, we have a job-rich recovery but wages are not doing an awful lot. it's a problem for sure. >> peter, thank you very much for coming in. appreciate your input. >>> we are waiting to hear from the ecb's chief economist peter priatt who is due to speak at any moment the u.s. government threatening to impose an additional 10% tariff on 2$200 billion of chinese goods. beijing has vowed to respond po

mr. draghi, two questions. rate hike, but we have no real idea what happens after that. mr. draghi: i'm sorry, you said what? the firste a date for rate hike, but we have no will idea about what happens after that. you said it is more of a next dictation than an attention -- then an intention to keep rates on hold. is there any discussion of getting stronger guidance on rates, or is there a model where you are offering investors conditional pass for rate hikes. my second question, you emphasized in your opening statement and in some of your remarks about incoming data has not been good, and threats to the outlook are on the rise, but yet you still say the risk to the outlook is broadly balanced. what exactly are the upside risks, and what would it take to emphasize thatcy the balance is now shifted toward the downside? thank you. mr. draghi: thank you. to say that we anticipate, because that is what we say, you know? means series of actions that based on the current assessment, we are taking these actions, and

actually it was very mean a person up there who opened the story for colombia after the corner how mr draghi has the byron star chipped it into the box and you had to take the u. sor colombia and such an important game but then in the second half is when things got really wild because right m l falcao he scored the second goal for the south americans and now they had practically secured their spot already but it wasn't over yet because there was still a mystery this with another sensational pass across half of the pitch and bunker john doe didn't miss netted and it was three zero in the end to colombia in a very very important game for the colombians and for the polish because that means polish with robert lewandowski the buy in star striker are out of the world cup surprising for poland there let's talk about group leaders japan and senegal they played earlier on and that was also really entertaining match absolutely from the start and it was senegal actually had a really good start into the game and they started to take an early lead from a very comical goal that was really poor defending

mr. draghi over the last eight or nine days what's your takeaway from the language they used >> to me, it's clear they want to move forward, but they're worried but of what they've seen in the past. a lot of policy mistakes the ecb raised too early and because inflation is below target, they're not in a rush. they're in this situation when they would like to hide but they're worried about being data dependent. and there will be a first hike next year, but it will be a slow process under normalization. >> you heard those comments from mr. novotny saying the risk of financial stability in europe is more political than economical where are those risks? what do you see them to be >> if you look at the european economies, it's strong if you look at account surplus, for the first time since '99, all member states have a deficit below 3% there's been a lot of improvement in europe. it's on a political front that there's a lot of flash points. even italy and brexit is part of the story. even the situation in germany is becoming more difficult. that has nothing to do with the economic policy but it'

mr. draghi was questioned by one of the journalists in the press conference he said we didn't actually discuss monetary policy in the april meeting. now we have gone from a boring april meeting to one that is potentially live what h what has changed >> that was something that they didn't discuss monetary policy at a monetary policy meeting however i think the situation has changed profoundly since last week with this speech from peter praet. he had been arguing before for more patience, but now all of a sudden he said that basically all the criteria for ending qe have been met. >> so, just to pick up on that peter praet weighed in on the debate saying perhaps the time has come for them to think about unwinding this asset purchase. my question to you is do you think the time is right now? or should they buy more time, assess how the data is doing and perhaps take a live decision back in july seems like we have actually lost connection with kristoff reiger from commerzbank we will come back to him as soon as we reestablish the lines. it's a big day and lots of questions about what the ecb are go

mr. draghi faces? on the one hand you have a strong economy, stable growth and real inflation. in germany, cpi number at 2.2%. for germans, serious inflation. on the other hand, political issues in the eu, whether or not the ecb should be doing things like bailing out italy, when the bond yields start to soar. germans don't want to see that kind of bail. mario draghi may want to keep that option open for later on down the road. tom: matt miller, i don't care. in mexico take out germany in four days beat them at the world cup? reporter: absolutely not. i don't think germany will win the whole thing but they can definitely beat mexico. at the end, i can think spain can pull it out and win the title. francine: there you go. matt miller. latest on the world cup. miller, throughout the day. ecb policy decision live at 7:40 a.m. in new york. 12:40 p.m. in london. we will hear from president draghi for a five minutes after that. you can -- 45 minutes after that. you can follow our live blog on .he rate decisi

mr. draghi was hoping for.ister worked for the european commission and he is known in the international community. he is looked upon as an eu friend. coronado is still with us. that is the set up. here is the market. come inside the bloomberg. bond --the italian bund. it is spiking. spain versus italy. the spread has narrowed. is that the appropriate reaction in europe? julia: i do think the spanish situation is better than that in italy. beenpanish economy has doing better than the italian economy. the government was stable for and hasperiod of time been able to implement the structural reform so key to keeping the european union together. inhink some of the questions italy are more existential and potentially more disruptive to the european experiment. david: julia, you talk about the reforms that help keep the eu together. what about fiscal restraint? italy wants to spend more money. we do not yet know what about spain. it is quite possible that we have seen the end of austerity there as well. they may is po

mr. draghi. we will see if there is any indication when the central bank will stop, or at least halt its asset purchase program. let's bring in our global policy itor kathleen hays for more. tell us about whats iving the fed. leen: jay powell says confidence is rising, hans economy is doing well. they raised the key rate. that was not a surprise. four more hikes are likely, because one person changed their mind -- i would love to know who that is. what markets are responding is to is that the fed is moving in that direction. here is how jay powell put it at the beginning of the p conference. >> the name takeaway is that the economy is doing very well. most people who want to find jobs are finding them, and unemployment and inflation are low. interest rates have been will for some years while the economy is recovering from the financial crisis. kathleen: let's look at the numbers in terms of how the forecast changed. a little bit stronger, but unemployment down to 3.5% by the end of 2018. already

mr. draghi. i'm not sure they like that over in europe so much. the morning read. we will get isn nonmanufacturing index. president trump hold a celebration of america of event. it is a brand-new invented thing made up at the last minute when the president disinvited the nfl champion philadelphia eagles on the ongoing dispute whether employees should stand for the national anthem. tesla holds its shareholders meeting at 5:30 this evening eastern time. some shareholders pushing for more dashboards changes. , thee joined by luke bloomberg cross asset reporter. in case you are wondering by the markets can't decide, we heard ubs andgio, the ceo of this is what he had to say. clientse recommending to still be in the market does the profitability's and growth we see are still supportive of equities in general terms. signalingy careful in the cyclicality may, in -- may come in. thinking about diversification and edging is ain this environ't want them to be too complacent. , i listen an investor to that, what do i do? where do i go? >> part of this is being cognizant of wh

mr. draghi, you have headline inflation on the latest estimate right after the target, isn't that great? you can see how a certain extent energy prices are the reason you have this move up. if oil prices come down, what happens to that headline number? it is interesting mario draghi said significant stimulus is still needed. he pulled off a hawkish step for the bond market. european bonds rallied across the market, carried over into the u.s., as mario draghi managed to threaten this needle in a thread this needle very effective way. yvonne: ecb removing stimulus. the fed signaling for a speed up in rate hikes this year. >> if anybody can carry it out, kuroda.urhiko in an analysis, 45% of economists say they cannot change their situation. what is particularly vexing for governor kuroda, inflation down to 0.9%. now the key measure, 0.7%. what is going on? one thing we can say, policy divergence. wider, divergence gets that could be good, because it strengthens the yen. inthing that boosts exports the second quarter, grows the economy and inflation. the press conference after the meeting --

mr. draghi sets the table and how commitment to reduce or eliminate qe, the deadlines brought up, all of that, in my opinion, makes friday's bank of japan meeting mightily more important. the bank of japan will be odd man out with unrealistic estimations of reaching goals of inflation never to be hit on a sustainable basis. the economy already faltered a bit. the pressure is on in my opinion, but everybody, of course, is watching to see exactly how fine of a point there is on draghi's time line with qe. don't diminish the fact while our fed meetings go on tuesday and wednesday, there's cpi tuesday, ppi wednesday, and on monday, we auction 3s and 10s, 53 billion, wilf, 30s out of the way tuesday, clearing the zone for rate increases that many expect on wednesday. it really could be the huge week with regard to policy, traders down near optimistic, with regards to north korea, questioning monetary policy, but for the one thing that does not bother anybody on the trade floor is trade policy. >> or what about, guys, last word to you, tim, nuclear summit tuesday. do markets ignore this, or do

mr. draghi's efforts.f dollar, but what is the character of the dollar launch here? do we get back to the strong dollar of two or three years ago? can youother conclusion come to accept that this dollar is headed upward? ist we have to watch out for how much tightening the dollar is going to do on top of how much tightening the fed puts in place. we talked before that the depreciating dollar for 13% over the last year has offset a lot of the tightening. right now the fed is going to have a put back in place some of the tightening that was discarded by the dollar. francine: we have not even touched on oil. that brings me back to what the president we did two days ago about opec, saying it is not fair. what is your take on the opec meeting next week? and the role-play that president trump is going to have in all of this? >> the u.s. production of shale is still going to be the producer of the future. right now the do virgins between u.s. pricing in west texas and brent is about -- is one of the widest gaps i

mr. draghi did a few days ago, it was buying insurance. they are worried oob around italy.ound trade war. however for me this is just a buying of insurance. if the downside risks don't materialize, the guidance the e.c.b. gave in terms of rates, i think we'll be out of dates. domestic demand in europe is doing quite well. buying insurance, however if the downside doesn't materialize we could be talking about e.c.b. tightening by the end of the year. francine: thank you very much. both will be staying with us. remember bloomberg users can interact with the charts shown using g tv go. you can catch up on key analysis and chars for future references. there are some pretty good charts. i have a chart looking at some of the dynamics for bonds in germany. what we need to focus on of course is trade. stocks retreated overall. merging markets under a little bit of pressure as there seems to be a cloud over the economy because of trade. this is bloomberg. ♪ ♪ two, down, back up! our phones are more than just phones. they're pocket-sized personal trainers. last minute gift finders. [

mr. draghi, in control, we know what we are doing. do you buy it?tral banks really in control right now? luigi: excellent point. i think they are in control of what they can control which is monetary policy with some limits. they cannot control trade, they cannot control political issues and those seem to be the big shocks coming up. it would probably be driven by -- we cannot expect them to control politics and i think they know that. tom: what are you listening for? it is one of the most interesting conferences of the year. when you got off the plane and you got in your helicopter and you went to sentra, what is the thing you are listening for in portugal? angi: no helicopter, just uber. thedes that, i listen about disappearing curve and i thought it was quite interesting because they search hard to find the curve and surprise surprise, they find it in house prices. it seems house prices are very sensitive to the cycle and wages are not, which raises the question of why wages are not. it seems specific of the market for wages and maybe there is no

mr. draghi.g to see have a difference it themselves and talk about currency dynamics. tom: please look for that at 2:00 p.m. london time and into the late morning in new york. a lift to the market today. down off that trade news, and up we go this morning. i am watching gold. and tom keene, finance, investment, and the relations of washington, the brexit vote of london. please stay with us. this is bloomberg. ♪ ♪ tom: good morning. looking at the terminals, futures up. to london. here is first word news. trump administration ramping up pressure on china, accusing beijing of hijacking international property and pursuing policies that threaten economic and national security. report was released while the u.s. considers another $200 billion of tariffs on chinese goods. president trump hardening his stance on the family separation policy, saying the alternative "s "totally open borders. the president is facing a backlash of both parties. kim jong-un is not in a rush to get rid of his nuclear weapons.

mr. draghi. but i don't think it complicates the decision making process.mes down to that e.c.b. governing council, and how they put together their various viewpoints and opinions over the period. i think the context of what we were talking about, about a check list of variables, and in a sense, when we talk about central bank policy being data dependent, we've become so conditioned in terms of being hand held in terms of the directionality of policy. but i think the changing of the guard of the e.c.b. i don't think will influence the rate decision unduly. frape thank you, both, zphick jeremy. coming up tomorrow on bloomberg tv and radio, we speak with lloyd blankfein. that's tomorrow, 3:00 p.m. in new york. that's 5:00 p.m. in london. this is bloomberg. ♪ francine: this is "bloomberg surveillance." tom and francine from london and new york. tom, let's get straight to the bloomberg business flash here london. shares are surging today, lufthansa is in discount talks. that raises the possibility of a bidding war. the parent of british airways, i.a.g., has tak

mr. kuroda will have much more pressure, if mario draghi even delivers a little bit of what many tradershe odd central bank out. could it have come at a worst time they just had their first negative quarter over quarter gdp number in several years. i'm not saying that they're economy hasn't improved. they also have a threshold for inflation that seems highly unrealistic. in the very beginning of the crisis era, i remember policies. it's not directed to any particular country it's nice to have a target for inflation. if it's something that isn't ever going to occur within a logical timeframe, does that mean these insane policies will go on forever? you may learn friday if you're looking for the big meeting for volatility, let's learn what the bank of japan says after mario draghi. carl, back to you. >> provocative take there, rick. either way it's going to be crazy. rick santelli. thank you very much. >>> when we come back, we're on triple crown watch at the belmont stakes live at the track next more "squawk" after the break. welcome to holiday inn! thank you! ♪ ♪ wait, i have something f

based on the pure activity, the promise the promises of mario draghi the actual movement of balance sheets in the u.s. it's going to put mrda in the box. it will. while all of this is going on, let's look at data points, shall we first of all, when you look at the markets it they look half fool or you would say none of these are really the reason. i think i would question that. i think it's difficult to ascertain differences of how foreign trade, monetary policy and foreign trade policy are playing in one sure on the latter, everything changed in the markets about 50 or 60 hours ago with mario draghi telling us this is going to be a hot meeting on quantitative easing a week from today. finally, eurozone, they're growth number us i understand when you lump all of the countries together i'm not sure if the information is better or worse. as with the european union growth as evidenced by gdp is up 0.4 for the final read on the quarter, wafd on first quarter versus fourth quarter. that's the slowest month since 2015 the reason i bring that up, it shouldn't be shocking but with the euro going up and rates going up, it shows yo

mr. trump bombing us mercantilist theory? do powell and draghi to what we are seeing on our television screen now? nigel: i think they have been very responsible. what we have seen from central banks has been very responsible in the last 10 years. in the last 20 years, portuguese bonds have outperformed the s&p 500. we have seen extraordinary things happen as a consequence interference in a positive way. you can borrow more money from more people. financing is still very cheap. there are lots of great ideas going on. there are industries and jobs being created. -- new industries and jobs being created. they cannot stand back and in nothing. hopefully it is a scrimmage. we don't want the skirmish to be a war. a trade war is very different. it is not going to change the world's economic growth, however big things will change economic growth. tom: we welcome your worldwide this morning on radio worldwide and on bloomberg television looking at the spanish parliament and their new prime minister pedro sanchez. mariano rajoy is out. we want to bring up