Mario Draghi is proving himself a master of all-talk central banking – which is all the rage these days – by going long on verbiage and short on policy whenever possible and not worrying about tripping over any contradictions.
The European Central Bank president was at the top of his game at his monthly news conference Thursday, vowing to do whatever was necessary to keep the economy afloat and prices stable while finding new excuses for not acting – at least not yet. Hey, it worked once before, when a similar promise in the summer of 2012 to defend the euro at any cost bolstered the beleaguered currency and prompted a recovery in Spanish and Italian bonds.
This time, he catalogued the gamut of bold options – from massive asset purchases to negative interest rates – discussed by the European Central Bank's governing council to cope with feeble growth and the risks of a deflationary spiral.
"We don't exclude further monetary-policy easing," Mr. Draghi said. He added that the entire 24-person council "is unanimous in its commitment to using also unconventional instruments within its mandate in order to cope effectively with the risks of a too prolonged period of low inflation."
But that came after he declared that "incoming information confirms that the moderate recovery of the euro area economy is proceeding in line with our previous assessment." It's like the plumber who assures the nervous homeowner that he has a full tool kit to deal with the leak flooding the basement, but that it's better to wait for it to repair itself.
We're seeing much the same from new Federal Reserve chief Janet Yellen and that master of the craft, Mark Carney of the Bank of England.
Ms. Yellen stirred the pot in March when she said the Fed could begin raising rates as soon as six months after ending its bond-buying spree. A couple of weeks later, she shifted gears, saying that the Fed's "extraordinary commitment" to low rates would still be needed "for some time" and suggested that there was broad agreement on this from her fellow policy makers.
Then there is Mr. Carney, who suggested in an interview in northeast England that interest rates could begin heading upward before the next scheduled election in May, 2015. But he went on to note: "There is still slack in the labour market. You can see that here and right across the country. We need to use up more of that slack before we raise rates."
All this talk comes in the guise of a commitment to transparency, while carefully sidestepping sharp divisions over policy at the ECB and to a lesser extent at the Fed.
Thorough explanations of policy options are welcome, as are making plain the frank differences of opinion so visible in the ECB and the regional Fed banks. But with worried rhetoric having become the norm rather than the exception, all this blather is unsettling markets and making it tougher for businesses to assess longer-term financial conditions.
I'm not suggesting we go back to the days when central bankers rarely shed much light on what they were up to or how they intended to go about it, even though some people found that method preferable. As Hillary Clinton once said of Alan Greenspan's long reign at the Fed: "I never understand what he's saying. But nevertheless people respond to that Delphic Oracle approach."
The problem comes when talk substitutes for necessary action. Sooner rather than later, Mr. Draghi and that "unanimous" ECB council are going to have to see if their weapons actually work. The name of the next hot new game is: Put up or shut up.