Former ECB Chief Economist Peter Praet

Monetary policy might not be able to offset supply and confidence shocks stemming from de-globalisation and trade wars, says Peter Praet, former member of the ECB Executive Board and its chief economist from 2011-2019.

by Peter Praet 13 Nov 2019

Monetary policy might not be able to offset supply and confidence shocks stemming from de-globalisation and trade wars, says Peter Praet, former member of the ECB Executive Board and its chief economist from 2011-2019. In such an environment, additional easing via unconventional measures such as deeper negative rates or more asset purchases might not make much difference to inflation anymore, which is at the heart of the current malaise. The best strategy for the ECB is to preserve current financial conditions including a contained currency, though if there was tightening via a stronger euro, another 10bp cut might have to be delivered.

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