Monetary Policy

The Bank for International Settlements (BIS) is optimistic that the global economy will achieve a soft landing. However, it cautions that central banks must remain vigilant on inflation, and calls for fiscal restraint from governments.

ECB Executive Board member Isabel Schnabel recently received the Global Economy Prize in the Economics category. Since taking up her post at the central bank, she has become an influential voice.

The central banks have shown that they can take powerful action against a dramatic rise in inflation. Now the central banks must stay the course – and governments must take action.

Jens Weidmann and Emanuel Mönch are the Directors of the new Centre for Central Banking at the Frankfurt School. In an interview they discuss monetary policy, climate change, and the work of the Centre.

The ECB's rate cut in early June was appropriate. But following it with another one in July would be a mistake.

Commerzbank's Chief Economist Jörg Krämer believes that the ECB's recent interest rate cut is likely to prove to have been a mistake.

Financial markets had already priced in the 6 June interest rate adjustment. The ECB must now weigh up its next move.

KfW Chief Economist Fritzi Köhler-Geib discusses how a turnaround in the interest rate cycle will impact investment by corporates and SMEs.

François Villeroy de Galhau warns against cutting rates too late by the ECB. In the interview with the Börsen-Zeitung the Governor of the Banque de France also talks about which factors could particularly influence monetary policy in the near future.

Carsten Roemheld from Fidelity International discusses the phenomenon of Nvidia, interest rate moves by the ECB, and sectors outside of big tech that have the potential to lead the stock markets.

DIW President Marcel Fratzscher believes that interest rates in the Eurozone are too high and calls for a different communication strategy from the ECB.

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.

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.

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.

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 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.

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.

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.

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.