Commentary

Whoops! 'Financial Times' Error Sends Markets Scrambling

The best proof of newspapers’ continued relevance may come when they screw up. 

The Financial Times demonstrated its broad reach and deep engagement with market makers when it seriously muffed a report on the European Central Bank’s heavily scrutinized decision on interest rates, briefly cause the euro exchange rate to rise against the dollar.

While the Fed is considered likely to raise interest rates later this month, in the lead-up to this week’s announcement, the ECB was widely expected to lower interest rates in a bid to stimulate investment, reflecting mounting concern over weak growth and dangerously low inflation across the euro zone.

These expectations proved basically correct. On Thursday, the ECB lowered interest rates further into “negative” territory with a 0.1% cut to minus 0.3%. (Negative interest rates means depositors have to pay banks to hold their money, potentially encouraging them to invest elsewhere.)

But there’s many a slip twixt the cup and lip. In this case, the slip came in the form of an erroneous report published on the FT Web site, with a corresponding tweet on its Twitter account, 10 minutes before the official announcement. That the ECB had “confounded expectations” with a “shock decision” to leave interest rates unchanged.

The FT withdrew the incorrect article almost immediately, replacing it with another reporting the correct details, and issued an apology not long after, explaining that it had prepared two stories on the decision ahead of time and posted the wrong one.

But a few minutes is a long time in the frantic world of finance, and that’s all it took to trigger billions of dollars in trading activity as investors piled back into euros, raising the exchange rate against the dollar by around a cent. It  doesn’t sound like much, but makes a big difference in aggregate; among other things, it canceled out gains in European stocks and stoked demand for Eurozone bonds.

In classic digital-media fashion, the error was compounded when other news organizations and wire services around the world picked up the incorrect information. The FT stated: “The FT deeply regrets this serious mistake and will immediately be reviewing its publication and workflow processes to ensure such an error cannot happen again.”

Ironically, the market reaction to FT’s false report may have anticipated what was going to happen anyway, as most investors expected a bigger cut by the ECB, causing stock markets around the world to decline following the official announcement. But the additional confusion certainly didn’t do anything to help investor confidence.

The error was particularly embarrassing as it came on the second day of FT’s new ownership under Nikkei.

While it’s small consolation, FT is in good company when it comes to screwing up reports on central banks.

This August, Bloomberg earned the ire of the Federal Reserve when it violated an embargo on the release of much-anticipated minutes on the July meeting of the Federal Reserve Board. Bloomberg jumped the gun with a headline sent to 325,000 customers 24 minutes before the 2 p.m. embargo deadline. Following the publication, Treasury bond prices fell sharply. A Bloomberg News editor later resigned over the incident.

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