Those who expected the ECB to back off its anti-inflation strategy were surprised. In the August Economic Bulletin, the Frankfurt institute did not announce any changes to its rate hike policy: “The Governing Council’s future decisions will ensure that the ECB’s key interest rates are set at sufficiently restrictive levels for as long as possible. necessary with a view to achieving a timely return of inflation to the 2% target over the medium term. The Governing Council will continue to follow an evidence-based approach in determining the appropriate level and duration of the restrictive guidance.”
“In particular, interest rate decisions will continue to be based on the assessment of the inflation outlook in the light of the most recent economic and financial data, the dynamics of underlying inflation and the intensity of monetary policy transmission”, continues the ECB, which details the rest of the strategy: “The Governing Council also decided to set the remuneration of mandatory reserves at 0 percent. This decision will preserve the effectiveness of monetary policy, maintaining the current degree of control over its pitch and ensuring the full transmission of rate decisions to the money markets. At the same time, the decision will improve the efficiency of monetary policy, reducing the total amount of interest payable on reserves, in order – comment those led by Christine Lagarde – to implement the adopted orientation”.
Source: IL Tempo
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
