Economic reforms in the EU
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I do not know if Christine Lagarde is the lover of Giuseppe Tomasi di Lampedusa. But a well-known Italian writer’s line – “everything has to change for the better” – could be a boost to what the European Central Bank finds on its watch.
The ECB was previously a large bank that relied solely on its own resources to meet the deadlines, if any. Disagreement in its governing bodies meant that the protesters had to be dragged and pushed along with the masses.
Times have changed. Several strategies have quietly shifted the central euro bank to do what needs to be done with fewer disputes. Noise and rage have once been replaced by naturalistic, but well-thought-out ideas.
In July, the ECB’s governing body unanimously agreed on new ideas, following interest rate of two percent I am committed to persevering and persevering as interest rates decline. This review provided a solid basis on which the ECB had previously acted, and it represents a simple but significant change in the future.
The bank challenged skeptics by giving them patience and persistence in difficult interpretations. It will not raise prices until inflation is expected to hit or exceed the 18-month target and remain there (from mid to the end of the ECB’s two- or three-year period). If you want a short word of a technocrat waiting to see white before a break, you will not be better off than this.
Most hawkish words only give a refusal to tolerate the temporary reduction of the attainment that the question reaches. Those who think it does not mean any change they have been shown that The ECB’s new test raises the issue of whether to implement the policy.
It was against this when the ECB announced last Thursday it may delay the purchase of government funds. This was highly anticipated, and was “taper” in every word except the word. The same goes for: introduces her inside Margaret Thatcher, Lagarde stressed that “the woman is not painting”, choosing to “reform” the world. But this is no different distinction. The purchase price will fall.
What is needed is not a sign but a justification. Reducing “a little” has not changed, the ECB said, and having “money”. This gives something to everyone. Hawks see buying things slowly. Doves see insufficient funds to grow.
In short, the ECB has found the taper without difficulty. This leads to the launch of purchases in December if the economy fits well – or delays or shifts – all without drama. Jay Powell and the Fed will see themselves as lucky if they can do the same.
Many observers expect that as the pandemic approaches near the end of next year, a small full-time program can be encouraged and make a difference. There will no doubt be negative discussions at the governing body. But the beauty of the ECB’s careful operation is that the slope is relatively straightforward.
The Hawks have found an ongoing taper on all purchases. Doves will be encouraged by buying regular items to change. Some predict that the link between the ECB’s directives between the end of the deal and the price hike will be broken, allowing the hawks to force the end soon to reduce the volume – but this will also help pigeons to keep prices low. All of this should be taken into account in the current economic climate – close to how you can manage long-term interest rates without doing so.
The central bank cannot expect a good place to be. However, Lagarde defended itself when asked about the “five-year five-year period” of inflation – a factor driven by what the market thinks inflation will be five to ten years from now – which has increased by half this year to stand above 1.75. He acknowledged the resurrection, but said so “We do not want to be slaves to data.”
It is clear that the expectations of the ECB are being met. Lagarde could have said that he would have liked to see the amount of 5y5y exactly two – but that finding two-thirds of the way to the target in the short term is a guarantee of ECB loyalty.
The market that takes a little too far for the ECB to do what it wants is a change that even their President does not know.