Well, well, what a week! With so many statements from representatives of the Central Bank, it is difficult to keep track of everything. We collected the most significant quotes and placed them in one place so that you can easily understand where the monetary policy is going.
The week began with a speech by the ECB President, Mario Draghi, at the University of Lisbon, on the growing income inequality within the unit.
“Is this a destabilizing factor so serious that we have to reckon with it? Yes. We must fight against inequality, ”Draghi explained, arguing that education, innovation, and investment in human resources, especially in the younger generation, is the right way.
A day later, the head of the ECB launched the ECB’s annual forum in Sintra with an unexpected change in its rhetoric regarding monetary tightening – one of the most discussed topics today. Draghi, an ardent proponent of quantitative easing and low interest rates, seems to have opened the door to future changes in bank policy, should economic growth prove strong.
“If the economy continues to recover, the political position will begin to adjust, and the Central Bank will be able to contribute to the recovery, changing its political impact. This will be done not to tighten the political position, but just to keep it intact. “ P>
Although some analysts believe that the ECB may announce a reduction in cash inflows in the coming months, the bond purchase program by 60 billion does not seem to go anywhere in the near future.
Also on Tuesday, Federal Reserve Chairman, Janet Yellen, attended the meeting in London. However, she didn’t say anything useful about monetary policy, while reiterating that “the system is alive and well”, saying that:
“After the financial crisis, those who consider such thinking to be wrong have played an important role in the conviction that we have a more suitable management and regulation system, we hope for a long time.”
The head of the Bank of England, Mark Carney, was another representative of the central banks who spoke at the ECB forum. His statement about a possible change in the rate raised the pound sterling against the dollar to the level of 1.2915.
“Some reduction in monetary incentives may become necessary if the concessions to which the monetary policy committee proceeds continue to decrease, and political decisions, accordingly, become more usual. The decision will depend on the extent to which lower consumption growth will be offset by other components of demand, including business investment, whether wages and labor costs will be strengthened, and, most importantly, how the economy responds to tighter financial conditions and Brexit negotiations. That is what the monetary policy committee will confer in the coming months. ” P>