ECB Launches First Strategic Review Since 2003

Author: Corey McDowell - Economics Editor

Published: 23 Jan 2020

Last Updated: 2 Feb 2023


For only the second time in its history, The ECB has launched a comprehensive review of its monetary policy for the future.

For only the second time in its history, The European Central Bank has launched a comprehensive review of its monetary policy for the future. The review would mainly encompass policies around inflation targeting, negative interest rates and quantitative easing. This announcement from the ECB is timely given divisions and discontent has been simmering in the background during the latter stages of Mario Draghi’s stewardship. 

The president of the ECB, Christine Lagarde, also indicated that this review could also explore the ECB’s role in cryptocurrencies, climate change and inequality. While Ms Lagarde is determined to put her own mark on the ECB, some central bankers are worried that the bank may overstep its remit and hinder its independence, especially if it were to involve itself in environmental matters. It would certainly leave the bank open to political criticism on top of scrutiny on its monetary policies. Ms Lagarde had said the ECB should examine “how we can be effective in participating in the fight against climate change” but whether this is the responsibility of a central bank is open to debate.

The ECB also announced on Thursday that they would continue with their money easing policies. The bank has held its deposit rate at –0.5% and reiterated its commitment to buy up EUR 20 billlion euros worth of bonds monthly. Few analysts have picked up on the fact that gold has recently recorded an all-time high priced in eurosaccording to our chart the precious metal hit €1443.95 on the 8th January, which could very well be a response to the ECB’s easy money strategy.

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