Euro Area – BerlinOeconomicus

Statement on ECB interest rate decision

July 20, 2017 Marcel Fratzscher 0

The ECB keeps its options open about the exit of its expansionary monetary policy stance. There has been no significant change in ECB communication. The statement by President Draghi makes a very gradual tapering of its bond purchases in 2018 the most likely path. Many open questions about ECB monetary policy remain unanswered. It is still open when the ECB will end its bond purchases and when it will start raising interest rates.

The overreaction of financial markets to ECB … [continue reading]

ECB Europe Foreign Trade and International Economic Relations Macroeconomics Monetary Policy

Statement on today’s meeting of the Council of the European Central Bank (ECB), July 21, 2016

July 21, 2016 Marcel Fratzscher 0

The European Central Bank is facing a difficult dilemma. The slower the euro area economy is growing, the lower interest rates and the harder it becomes for the ECB to implement its public sector purchase program. The ECB has assumed a wait-and-see strategy in the hope that its new measures will be effective and the economy will not deteriorate further. Italy’s banking crisis, more than the Brexit, is an enormous risk for the entire euro area, also for Germany, and … [continue reading]

ECB Economic Policy Europe Foreign Trade and International Economic Relations

Making the Eurozone more resilient: What is needed now and what can wait?

June 27, 2016 Marcel Fratzscher 0

This article was first published on VOXEU.org on June 25, 2016.

Britain voted to leave the EU. This is terrible news for the UK, but it is also bad news for the Eurozone. Brexit opens the door to all sorts of shocks, and dangerous political snowball effects. Now is the time to shore up the Eurozone’s resiliency. The situation is not yet dire, but prompt action is needed. This VoxEU column – which is signed by a wide range of … [continue reading]

Economic Policy Europe Foreign Trade and International Economic Relations Public Finances and Financial Economics

Statement on the result of the Brexit referendum

June 24, 2016 Marcel Fratzscher 0

The Brexit decision is a catastrophe for all Europeans. The economic costs will be enormous for all of Europe. Britain could slide back into recession. We at DIW Belin expect a 0.5 percentage points lower economic growth in Germany in 2017 as a result of lower German exports to the UK alone. The risk is highest for countries such as Italy, which are vulnerable and could slide even deeper into the financial crisis.
I expect major volatility in financial markets … [continue reading]

Business Cycles, Growth, Economic Structure Currency and Financial Markets ECB Europe Macroeconomics Monetary Policy

Statement on Today’s Decisions of ECB’s Governing Council 09/03/2015

September 3, 2015 Marcel Fratzscher 0

The European Central Bank decision to stay course does not come as a surprise. The weaker projected inflation and growth figures were expected. The ECB is caught in a difficult dilemma: with its projections, the ECB admits that it will miss its price stability objective over the medium term. But it is wise for the ECB to follow a wait-and-see strategy. Global uncertainty has risen and is very high. The biggest concern for the ECB is not China or the … [continue reading]

Economic Policy Monetary Policy

ECB Projections for Growth and Inflation Very Optimistic – Downside Risks to the Euro Area Still Significant

March 5, 2015 Marcel Fratzscher 0

Comment on the ECB Monetary Policy Decisions (5 March 2015):

The new ECB projections for growth and the return to price stability are very optimistic. The ECB projections are based on probably too optimistic expectations about the effectiveness of its QE programme. The weak euro and the decline in government bond yields over the past few months are largely the result of the high expectations about the QE programme. It is unlikely that the QE programme will continue to exert … [continue reading]