Monetary Policy
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„Three interest rate cuts by the end of the year are insufficient“
DIW President Marcel Fratzscher believes that interest rates in the Eurozone are too high and calls for a different communication strategy from the ECB.
„Japan's monetary policy will only change slightly“
The Bank of Japan is under pressure from the financial market to raise interest rates for the first time in 17 years. But according to former central banker Shirai, there is no scope for further rapid interest rate hikes. The Japanese economy is too weak for that.
ECB maintains its system of excess liquidity
The ECB is making several adjustments to its monetary policy framework. However, the changes are not a departure from the current system of excess liquidity.
„I don't think there's a high risk of the ECB cutting interest rates too late“
Monetary policy expert Volker Wieland believes that the current interest rate level in the eurozone is not particularly restrictive. Therefore, there is much to suggest that key interest rates will not be lowered before June.
Poor advisor for monetary policy
When considering interest rate cuts, the ECB should not look too closely at its own forecasts for inflation and economic growth. There are several reasons for this.
The ECB's dilemma
The ECB bases its monetary policy on the economic data for the entire eurozone. The situation sometimes differs significantly depending on the euro country. This poses a problem for the central bank.
First ECB interest rate cut in spring would be a mistake
There is concern that the ECB may lower interest rates too late in light of the successes in reducing inflation. Even though the ECB must be aware of this risk, it should by no means give in to market expectations of an interest rate cut by April.
„We as the Governing Council must avoid a shock therapy“
The debate about the ECB‘s future course is gaining momentum - on the markets and among economists, but also among the euro central bankers themselves. In an interview, ECB Governing Council member Olli Rehn speaks plainly about the current situation and the outlook.
“We must be Patient and Vigilant at once”
According to François Villeroy de Galhau, Governor of the Banque de France and Member of the Governing Council of the ECB, the European Central Bank should retain the great flexibility of the emergency bond purchase program PEPP as far as possible beyond its planned end in March 2022.