Statement on the meeting of the Council of the European Central Bank (ECB), January 19, 2017


ECB President Draghi has clearly signaled a continuation of its current course of monetary policy. The rising inflation trend is a positive, welcome development for everyone. Especially Germany should welcome the positive trend in inflation. The sooner the ECB can achieve its price stability objective of 2%, the sooner the ECB can end its expansionary monetary policy stance.

There is no good reason for the current enthusiasm about higher inflation. The recent rise in inflation is mostly temporary and reflects a normalization of energy prices. The ECB will most likely not achieve its price stability mandate before the end of 2018. Germany and the euro area should be prepared for another 2 to 3 years of low interest rates.

The positive inflation trend is no justification for the public attacks against the ECB in Germany in recent weeks. The rise in inflation expectations in the euro area is a positive sign that ECB policy as well as structural reforms in Southern Europe are working and that the euro area is gradually recovering from its crisis.

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Marcel Fratzscher

Author: Marcel Fratzscher

Marcel Fratzscher ist Präsident des Deutschen Instituts für Wirtschaftsforschung (DIW Berlin) und Professor für Makroökonomie und Finanzen an der Humboldt-Universität zu Berlin. / Marcel Fratzscher is President of the German Institute for Economic Research (DIW Berlin) and Professor of Macroeconomics and Finance at the Humboldt University in Berlin.

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