interest rates

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Blog Post

The international effects of ECB’s monetary policy

What’s at stake: the literature on monetary policy spillovers is abundant of studies investigating the impact of the US Federal Reserve’s monetary policy announcements and actions on emerging market economies. More recently, economists have been investigating the effect of the ECB’s credit easing as well.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: July 24, 2017
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Blog Post

Raising the inflation target: a question of robustness

In an unexpected move, the Federal Reserve Chair Janet Yellen has recently brought up the issue of raising the inflation target. This blog argues that an increase in inflation targets may prove to be beneficial in achieving price stability in the long run. This would increase the credibility of central banks in achieving inflation goals and stave off the distortionary effects of deflation.

By: Maria Demertzis Topic: European Macroeconomics & Governance Date: June 22, 2017
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Policy Contribution

European Parliament

Is the recent increase in long-term interest rates a threat to euro-area recovery?

After reaching historically low levels, European long-term sovereign yields experienced a notable rise at the end of 2016 and beginning of 2017. This paper discusses the factors behind it and the potential implications for the euro-area economy, public finances and ECB policy

By: Grégory Claeys and Konstantinos Efstathiou Topic: European Parliament, Finance & Financial Regulation Date: May 29, 2017
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Opinion

EZB-Chef Draghi enteignet die Sparer nicht

Die EZB reagiert mit ihrer Geldpolitik nur auf die schwache wirtschaftliche Lage. Sie ist nicht dafür zuständig, für hohe Renditen europäischer Sparer zu sorgen. Kapitalerträge hängen von guten wirtschaftlichen Strukturen ab - und für die sind andere verantwortlich.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: September 30, 2016
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Blog Post

Helicopter drops reloaded

What’s at stake: Central banks have recently been scaling up their unconventional monetary policy measures. Discussions about helicopter money seem to be getting ever louder. We review the theoretical discussions, the effectiveness of tax-rebates and legal and political complications

By: Pia Hüttl and Alvaro Leandro Topic: European Macroeconomics & Governance Date: March 14, 2016
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Opinion

Indebted ASEAN companies will feel Fed's rate rise

While the markets could not have been surprised about the U.S. Federal Reserve's decision to raise interest rates after a series of warnings since mid-2013, the key question is whether Asia is ready.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: December 22, 2015
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Opinion

The ECB and politics in an era of low interest rates

The ECB is often criticised for its low interest rate policy - especially in Germany, where this is felt to be an attack on savers. However, this argument fails to recognise that real interest rates have been falling since the 1980s.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: November 25, 2015
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Blog Post

The uncertain decline of the natural rate of interest

What’s at stake: Controversies over whether and by how much the natural rate of interest – the rate compatible with full employment and stable prices – has declined in the past few years has shaped views about the pace and extent to which central banks should normalize policy rates.

By: Jérémie Cohen-Setton Topic: European Macroeconomics & Governance Date: November 9, 2015
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Blog Post

Inflation expectations and global risks: the need for ECB action

The ECB will have its next monetary decision meeting on Thursday. Instead of following politically motivated statements that complain about low nominal rates, the ECB needs to focus on its mandate: price stability, defined as inflation rates close to but below 2% in the medium-run. So what do data on inflation dynamics and on the risks for euro area inflation tell us?

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: October 21, 2015
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Blog Post

The political economy of rate hike-ism

What’s at stake: The banking industry response to the Fed’s decision not to hike rates has led bloggers pondered about why bankers are pushing for higher rates in a low inflation environment and whether it actually goes against their long term interests.

By: Jérémie Cohen-Setton Topic: Finance & Financial Regulation Date: October 5, 2015
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Blog Post

The then and now of tightening cycles

What’s at stake: This week the Fed will be considering whether to raise its interest rate for the first time in nearly a decade. In a volatile context, the outcome of the struggle between those who want to normalize policy ASAP and those who worry about moving too quickly will be watched closely as it could provide clues on the likely destination and speed of travel towards normalization.

By: Jérémie Cohen-Setton Topic: European Macroeconomics & Governance Date: September 14, 2015
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Blog Post

Understanding the neo-fisherite rebellion

The idea that low interest rates are deflationary – that we’ve had the sign on monetary policy wrong! – started as a fringe theory on the corners of the blogosphere 3 years ago. Michael Woodford has now confirmed that modern theory, indeed, implies the Neo-Fisherian view when people’s expectations are infinitely rational.

By: Jérémie Cohen-Setton Topic: European Macroeconomics & Governance Date: July 19, 2015
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