The ECB recently completed an eighteen-month strategy review, published in July 2021, with the aim of innovating on both the design and the magnitude of its policy responses.
The European Central Bank
recently completed an eighteen-month strategy review, which aims to ensure that
its monetary policy is fit for purpose, both today and in the future.
This shadow report, authored by senior European economists and written in parallel
to the official review, provides a structured discussion of four important
topics which have been part of the ECB’s analysis in the run up to its strategy
review: the definition of the target (price stability and secondary
objectives); the operational framework; fiscal-monetary interaction; and the
implications for monetary policy of climate change and related mitigation
initiatives.
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This report, authored
by senior European economists and written in parallel to the official
review, provides a timely and clear framework to assess the current
changes to and future evolution of the ECB’s strategy.
The report provides a structured discussion of four important topics
which were part of the ECB’s analysis in the run up to its 2021 strategy
review: the definition of the target (price stability and secondary
objectives); the operational framework; fiscal-monetary policy
interactions; and the implications for monetary policy of climate change
and related mitigation initiatives.
The overall consensus is that the ECB is moving in a sensible
direction, but many questions remain unanswered and it remains to be
seen whether the new monetary policy strategy will successfully
accommodate the challenges it has set out to meet. This report provides
an excellent analytical accompaniment that will help frame the
discussion going forward.
Vox
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