• ECB Draghi: ‘Meeting our objective is about credibility’ ECB President Draghi vowed not to lower the ECB’s inflation target yesterday, stating that “Meeting our objective is about credibility. If a central bank sets an objective, it can't just move the goalposts when it misses it”. ECB President defended the Bank’s current stimulus package by pointing out that a continued period of low inflation, if it becomes persistent, could destabilize inflation expectations. Draghi downplayed the risks the very low interest rates pose to the Eurozone economy by highlighting that one of the biggest risks would be doing nothing instead of acting. After last week’s comments following the rate decision that there are no limits to how far they are willing to go, expectations for additional stimulus in March have increased. Eurozone’s CPI estimate for December, due to be released on Friday, although a bit outdated, should help us to better gauge the probabilities of fresh ECB stimulus. Another failure of Eurozone’s inflation to accelerate could make March a very realistic time for the Bank to pull the trigger. Nevertheless, we prefer to remain cautious, as the Governing Council could under-deliver again. • OPEC Secretary-General calls for cooperation OPEC Secretary-General has called for cooperation between oil-producing nations, even outside the cartel, to help stabilize oil prices. The vice-president of Lukoil, Russia’s second biggest oil producer, said they would not oppose a cut in output if it was politically backed by Russia. Saudi Arabia has also stated recently that it would consider cutting output if joined by large producers outside OPEC, such as Russia. Oil exporting economies have been under increasing pressure lately, which increases the chances for a possible cooperation to raise and stabilize oil prices, especially if prices fall further. However, there are still barriers to a possible output decrease, with Iran having expressed its intention to raise production further to regain market share, as the sanctions are now lifted. Thus, we would need to see a serious drop in output for the prices to bottom out, in our view. • As for today’s highlights, we only get indicators from the US. The SnP/Case-Shiller house price index for November is forecast to have accelerated from the previous month. However, bearing in mind that new, existing and pending home sales all declined in the same month, a minor acceleration in house prices may not be enough to offset the overall soft performance of the housing sector in November. The FHFA house price index for the same month is also coming out. The preliminary Markit service-sector PMI for January is expected to have declined somewhat from the previous month. The Richmond Fed manufacturing index for January is due to be released, but no forecast is available. The Conference Board consumer confidence index for January is expected to have remain unchanged from the previous month. Given that the preliminary U of M consumer sentiment increased in January we see the possibility for an upside surprise in the Conference Board as well. This could support the dollar somewhat. • We have only one speaker on Tuesday’s agenda: Bank of England Governor Mark Carney is expected to testify to Parliament on the latest Financial Stability Report. He may highlight again the global economic risks and persistent factors weighing on inflation and repeat that “now is not yet the time to raise rates”. Since the pound fell sharply on these comments the last time, repetition of the same comments could have limited impact today, in our view.