The ECB’s ‘unorthodox’ monetary policy [What Think Tanks are thinking]


Written by Marcin Grajewski

European Central Bank with Euro Sign, Frankfurt goodstock / Fotolia

In March 2015, the European Central Bank (ECB) launched its quantitative easing (QE) programme, the so-called Public Sector Purchase Programme, under which the ECB buys financial assets from euro-area banks, corporations or governments. This 60 billion euro per month scheme is aimed at putting downward pressure on bond yields, warding off deflationary risks, and generally, stimulating the economy by lowering the interest rate carried by various financial instruments.

According to many analysts, the ECB’s action has helped to contain deflation and lowered the borrowing costs of euro zone countries previously encountering sovereign debt problems. The ECB’s critics say its unorthodox actions, which followed similar operations by the US Federal Reserve, the Bank of England and the Bank of Japan, could still stoke inflation over the mid-term. The European Court of Justice ruled on 17 July that the crisis-fighting plan of the ECB to…

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