Currency and Financial Markets ECB Europe

Statement on today’s meeting of the Council of the European Central Bank (ECB)

The ECB is right to orientate its policy towards price stability at the mid-term and not to react to short-term price movements. Calls for an early exit of the ECB’s expansive policy are misplaced and premature. The price dynamics of the past two months mainly reflect a normalization of energy prices. The euro area economy remains weak and unemployment rates are too high to allow for a quick return to price stability and for an end to the expansive monetary … [continue reading]

Read more
Currency and Financial Markets ECB Monetary Policy

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. … [continue reading]

Read more
ECB Europe

Statement on today’s meeting of the Council of the ECB, October 20, 2016

The ECB decision bears no major surprises. Draghi did not contradict market expectations of an extension of the QE program to be announced in December. Such an extension has thus become even more likely. I do not expect a reduction in the monthly purchases by the ECB. Such a step would disappoint market expectations and could trigger undesired market reactions. The latest economic news are not encouraging and give little cause for a fundamental change in monetary policy.

Read more
Currency and Financial Markets ECB Europe Macroeconomics Monetary Policy uncategorized

Supplement: Statement on the result of the Brexit referendum

An important aspect, that has been widely ignored in the debate about the consequences of a Brexit, is the impact on ECB monetary policy. Lower oil prices and a weaker economy in the euro zone and in Germany are likely to increase deflationary pressures further. As a consequence, the ECB is likely to extend its expansionary monetary policy path further into the future. The Brexit will most likely imply a longer period of zero interest rates for the euro area.… [continue reading]

Read more
Currency and Financial Markets ECB Europe Macroeconomics Monetary Policy

Statement on the Federal Constitutional Court’s decision regarding the European Central Bank’s OMT program

The German constitutional court took a wise decision, but which is effectively a reversal of its earlier decision of January 2014. The court now accepts the authority and the decision by the European Court of Justice on the ECB’s OMT program of 2015. The backing down of the German constitutional court is a smart move, as it would inevitably have lost the battle against the European Court of Justice on issues of European law. … [continue reading]

Read more
Currency and Financial Markets ECB Economic Policy Europe Macroeconomics Monetary Policy

Statement on the Decision of ECB’s Governing Council 06/02/2016

The ECB has signaled that low inflation is likely to persist even longer than previously feared. The new projections by the ECB have increased the probability of an extension of QE beyond March 2017. The ECB is putting great hopes into its new liquidity program for banks in order to improve credit to the private sector, strengthen the economy and thereby raise the inflation rate.… [continue reading]

Read more
Economic Policy Europe Public Finances and Financial Economics

Judy Asks: Can Debt Relief Save the Euro?

A selection of experts answer a new question from Judy Dempsey on the foreign and security policy challenges shaping Europe’s role in the world.

The question is not whether debt relief is needed, but how and when it will take place.

Almost one year after the Greek debt drama, which almost ended with Greece’s exit from the eurozone, the conflict between the Greek government and its European partners is again heating up. The bad news is that progress on Greek … [continue reading]

Read more
Currency and Financial Markets ECB Economic Policy Europe Macroeconomics Monetary Policy

Statement on the Decision of ECB’s Governing Council 04/21/2016

“With its decision, the ECB has signalled the continuation of its expansionary monetary policy. The ECB policy of low interest rates will not end soon. I expect interest rates to remain close to zero for another 3 to 4 years.… [continue reading]

Read more
ECB Monetary Policy

Spotlight: helicopter money

In the latest Spotlight, DIW President Marcel Fratzscher explains why helicopter money offers the possibility to “circumvent” the banking system and make loans and funding directly available to households and private companies, which would help the ECB to fulfill their price stability mandate again.… [continue reading]

Read more
ECB Europe Monetary Policy

Mere criticism of the ECB is no solution

Joint op-ed by: , , , , , and published on Bruegel.org. A shorter version of this op-ed was published in FAZ.

The eurozone remains in a deep, largely macro-economic crisis. A robust global economy and falling oil prices have supported Europe’s economy for some time, but by now it is clear that the eurozone will only be able to pull itself … [continue reading]

Read more