25 August 2015SPEECH

Unconventional monetary policy at the ECB

Addressing the 30th Annual Congress of the European Economic Association in Mannheim, Germany, ECB Vice-President Vítor Constâncio explains how non-standard monetary policy measures can stimulate aggregate demand in the euro area.

Assessing the new phase of unconventional monetary policy at the ECB
MONETARY POLICY

Press conference on Thursday, 03 September 2015

ECB President Mario Draghi and Vice-President Vítor Constâncio explain the Governing Council’s monetary policy decisions and answer questions from journalists.
The press conference starts at 14:30 CET.

02/09/2015
Statistical press release: MFI interest rate statistics
31/08/2015
ECB publishes Guideline amending the General Documentation on monetary policy implementation
28/08/2015
ECB publishes Consolidated Banking Data for Dec-2014
27/08/2015
Statistical press release: Monetary developments in the euro area
19/08/2015
Statistical press release: Euro area monthly balance of payments (June 2015)
18/08/2015
Statistical press release: Euro area investment fund statistics - Q2 2015
13/08/2015
Account of the monetary policy meeting
of the Governing Council of the European Central Bank, 
held in Frankfurt am Main on Wednesday and Thursday, 15-16 July 2015
12/08/2015
Statistical press release: Euro area securities issues statistics
07/08/2015
Decisions taken by the Governing Council of the ECB (in addition to decisions setting interest rates)
August 2015
27/07/2015
Statement by the European Commission, the ECB and the IMF on Cyprus

All press releases

29/08/2015
Vítor Constâncio:  Understanding Inflation Dynamics and Monetary Policy
Panel remarks by Vítor Constâncio, Vice-President of the ECB at the Jackson Hole Economic Policy Symposium, ?Federal Reserve Bank of Kansas City, 29 August 2015

Summary

Understanding Inflation Dynamics and Monetary Policy

Panel remarks by Vítor Constâncio, Vice-President of the ECB at the Jackson Hole Economic Policy Symposium,
Federal Reserve Bank of Kansas City, 29 August 2015

At the 2015 Jackson Hole Economic Policy Symposium, ECB Vice-President Vítor Constâncio discusses main challenges in understanding inflation dynamics. He reviews recent developments in euro area inflation and related implications for monetary policy.

Understanding inflation dynamics has become particularly important in present times, in view of the prolonged low inflation phase. The traditional relationship between slack in the economy and inflation seems to have weakened significantly in some countries. This requires a careful examination since that relationship – the Phillips curve – is the traditional cornerstone of the transmission mechanism giving central banks control of inflation. Inflation dynamics since the Great Recession have shown signs of instability that have led to a sequence of systematic forecast errors. The two puzzles of “missing disinflation” in 2009-11 followed by “excessive disinflation” after 2012 triggered a surge of new research around the Phillips curve and its possible demise.

After reviewing a number of unsettled issues pertaining to the Phillips curve in the economic literature, such as those related to the measurement of economic slack and inflation expectations, the discussion note argues that the two puzzles can be explained, and that the Philips curve for the euro area is alive and well. This is comforting since the opposite result would raise serious questions about the central bank’s capacity to control inflation.

The current phase of low inflation is significantly driven by negative demand shocks at the global and domestic level, besides commodity price developments. This is certainly the case for the euro area where the low inflation can largely be explained by domestic demand weakness, possibly leading to a larger degree of economic slack than indicated by the usual methods. The link between inflation and real economic activity appears however to have strengthened in the euro area as of late (steepening of the Phillips curve). We should thus be able to bring the inflation rate closer to target in the medium term, provided that our policies are successful in significantly reducing the economic slack.

27/08/2015
Benoît Cœuré:  Drawing lessons from the crisis for the future of the euro area
Speech by Benoît Cœuré, Member of the Executive Board of the ECB, 
at “Ambassadors Week”, 
Paris, 27 August 2015
ENGLISH
OTHER LANGUAGES (2) +
Select your language
25/08/2015
Vítor Constâncio:  Assessing the new phase of unconventional monetary policy at the ECB
Panel remarks prepared by Vítor Constâncio, Vice-President of the ECB, 
at the Annual Congress of the European Economic Association 
University of Mannheim, 25 August 2015
16/07/2015
Mario Draghi:  Introductory statement to the press conference (with Q&A)
Mario Draghi, President of the ECB, 
Vítor Constâncio, Vice-President of the ECB, 
Frankfurt am Main, 16 July 2015
14/07/2015
Yves Mersch:  Ways towards more dynamic growth
Speech by Yves Mersch, Member of the Executive Board of the ECB, 
at the DZ BANK Kapitalmarktkonferenz 2015, Frankfurt, 14 July 2015
ENGLISH
OTHER LANGUAGES (1) +
Select your language
03/07/2015
Vítor Constâncio:  Strengthening macroprudential policy in Europe
Speech by Vítor Constâncio, Vice-President of the ECB, 
at the Conference on “The macroprudential toolkit in Europe and credit flow restrictions”, organised by Lietuvos Bankas, 
Vilnius, 3 July 2015

Summary

Strengthening macroprudential policy in Europe

Speech by Vítor Constâncio, Vice-President of the ECB,
at the Conference on “The macroprudential toolkit in Europe and credit flow restrictions”, organised by Lietuvos Bankas,
Vilnius, 3 July 2015

The current euro area environment, with policy rates required to stay low for a prolonged period of time and an apparent disconnect between the business and financial cycle, clearly points to a situation where monetary policy cannot deviate from price stability objectives to influence the financial cycle. This is the task of macroprudential policy. While acknowledged in principle, this fact has not yet been fully reflected in our policy frameworks.

Two major moves are required. First, macroprudential policy must place greater emphasis on preventing large fluctuations in the financial cycle, rather than simply increasing resilience to shocks when they occur. In addition to the bank-side capital based measures enhancing banks’ resilience, borrower-based instruments (such as LTVs or DSTIs), which have proved to be more effective in curtailing excessive credit growth, and are also applicable in a time-varying fashion, should gain more prominence. In particular, borrower-based measures should be properly embedded in European legislation, which is not the case at present. Second, a broader macroprudential toolkit is needed to address risks stemming from the shadow banking sector due to its increasing role in credit intermediation. This could involve measures such as redemption gates and loading fees to provide additional safeguards. Guided stress tests can provide comparable assessments of the health of individual institutions and of the resilience of the financial system as a whole. Appropriate policy responses to mitigate growing risks need however to be calibrated, in order to ensure a contained impact on credit supply to the real economy.

All speeches

14/08/2015
Benoît Cœuré:  Interview with Börsen-Zeitung
Interview of Benoît Cœuré, Member of the Executive Board of the ECB, 
conducted by Mark Schrörs of Börsen-Zeitung and published on 15 August 2015
ENGLISH
OTHER LANGUAGES (2) +
Select your language
27/07/2015
Benoît Cœuré:  Interview with Le Monde
Interview of Benoît Cœuré, Member of the Executive Board of the ECB, 
conducted by Marie Charrel of Le Monde and published on 27 July 2015
29/06/2015
Benoît Cœuré:  Interview with Les Echos
Interview with Benoît Cœuré, Member of the Executive Board of the ECB, 
conducted by Nicolas Barré, Catherine Chatignoux, Jean-Philippe Lacour, Etienne Lefebvre, Guillaume Maujean, Dominique Seux and François Vidal, Les Echos, on 29 June 2015.
ENGLISH
OTHER LANGUAGES (1) +
Select your language
13/06/2015
Peter Praet:  Interview with der Standard
Interview with Peter Praet, Member of the Executive Board of the ECB, and der Standard, conducted by Andras Szigètvari on 10 June 2015
ENGLISH
OTHER LANGUAGES (1) +
Select your language
10/06/2015
Benoît Cœuré:  Interview with La Croix
Interview with Benoît Cœuré, Member of the Executive Board of the ECB, 
conducted by Marie Dancer, La Croix, 10 June 2015
ENGLISH
OTHER LANGUAGES (1) +
Select your language

All interviews

25/08/2015
Report of the ESCB on the need for any measure to facilitate the access of CCPs to central bank liquidity facilities
25/08/2015
Working paper no. 1844: Domestic and multilateral effects of capital controls in emerging markets, by Martin Bijsterbosch, Matteo Falagiarda, et al.
24/08/2015
Working paper no. 1843: Debt overhang and deleveraging in the US household sector: gauging the impact on consumption, by Bruno Albuquerque, Georgi Krustev
24/08/2015
Working paper no. 1842: The real effects of credit constraints: evidence from discouraged borrowers in the euro area, by Annalisa Ferrando, Klaas Mulier
21/08/2015
Working paper no. 1841: Inattention to rare events, by Bartosz Maćkowiak, Mirko Wiederholt

All publications

31/08/2015
Guideline of the ECB of 27 August 2015 amending Guideline (EU) 2015/510 of the ECB of 19 December 2014 on the implementation of the Eurosystem monetary policy framework  (ECB/2015/27)
11/08/2015
Opinion on amendments to constitutional law and the Law on Česká národní banka (CON/2015/28)
Czech Republic, 
ENGLISH
OTHER LANGUAGES (1) +
Select your language
10/08/2015
Opinion on the use of an integrated data model for reporting data to the Oesterreichische Nationalbank (CON/2015/27)
Austria, 
ENGLISH
OTHER LANGUAGES (1) +
Select your language
05/08/2015
Opinion on a draft law on specific terms of restructuring of home loans denominated in foreign currency (CON/2015/26)
Poland, 
ENGLISH
OTHER LANGUAGES (1) +
Select your language
20/07/2015
Opinion on recovery and resolution of credit institutions and investment firms (CON/2015/25)
Greece, 
ENGLISH
OTHER LANGUAGES (1) +
Select your language

All legal acts

31 August 2015FINANCIAL INTEGRATION

Italy connects to TARGET2-Securities

The roll-out of T2S, the European securities settlement platform, moved a step forward today with the successful connection of the Italian market. T2S now covers five countries and will extend to 21 over the next two years.

Launched last June, T2S is a driver of capital market integration in Europe.

EXPLAINERS

What is monetary policy?

Why does monetary policy matter? Because it has a direct impact on interest rates and an indirect impact on inflation, the economy and employment.

Interest rates

Marginal lending facility 0.30 %
Main refinancing operations (fixed rate) 0.05 %
Deposit facility − 0.20 %
Effective from 10 September 2014

Inflation rates

Full inflation chart Inflation dashboard

Reference rates

USD US dollar icon arrow up 1.1255
JPY Japanese yen icon arrow up 135.21
GBP Pound sterling icon arrow up 0.73690
CHF Swiss franc icon arrow up 1.0867
Last update: Wednesday, 02 September 2015 Euro foreign exchange rates

Multimedia

  • ECB and the Eurosystem explained in 3 min.

  • Illuminating the Europa series – Discover the new €20

  • TARGET balances in 8 minutes

  • Collateral management - the role of the Eurosystem

  • Living in Frankfurt. Working for the ECB.

  • Working for the ECB. Building banking supervision

  • Danièle Nouy and Sabine Lautenschläger talk about the ECB's new banking supervision role [raw video]

  • Financial Integration in Europe - cover image

    Financial Integration in Europe

  • ECB statistics: a brief overview - cover image

    ECB statistics: a brief overview

  • Progress through crisis? Conference for the 20th anniversary of the establishment of the EMI - cover image

    Progress through crisis? Conference for the 20th anniversary of the establishment of the EMI

  • Legal framework of the Eurosystem and the European System of Central Banks. ECB legal acts and instruments - cover image

    Legal framework of the Eurosystem and the European System of Central Banks. ECB legal acts and instruments

  • The international role of the euro, July 2015 - cover image

    The international role of the euro, July 2015

  • Statistics for Economic and Monetary Union. Enhancements and new directions, 2003-12, by Peter Bull - cover image

    Statistics for Economic and Monetary Union. Enhancements and new directions, 2003-12, by Peter Bull

  • The monetary policy of the ECB - cover image

    The monetary policy of the ECB

  • The payment system – payments, securities and derivatives, and the role of the Eurosystem in this field - cover image

    The payment system – payments, securities and derivatives, and the role of the Eurosystem in this field