Monetary policy – What´s next for the ECB

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On 25 January 2019, the ECB's Brussels Representative Office and the Permanent Representation of Austria to the EU organised a conference-colloquium given by Ms Natacha Valla, ECB Deputy Director-General for Monetary Policy.

The main purpose of Ms. N. Valla's speech was to present the ECB’s policy on interest rates for 2019 and to make a short analysis of the previous interest rate policies, giving many examples and using an ex-ante and an ex-post roadmap from 2014 till today. After mentioning the 2019 forecasts for lower than the previously expected GDP growth in the euro area, some risk factors related to the world economy (potential commercial wars), as well as the expected inflation rate of 1.6%, which is lower than the objective of the ECB, Ms. N. Valla said the following: The current levels of interest rates will be maintained until summer and in any case all the time necessary to keep inflation, in average terms, below but very close to 2%. This could be interpreted as an announcement that the ECB is not likely to raise the basic interest rate this year. As regards, the evolution of growth, she highlighted the fact that the EU GDP has taken seven years to recover to the level of 2008, compared to 5.5 years in Japan and 3.5 years in the US. If we take 100 as the basis for GDP in 1990, in 2018 the GDP of the USA was 150, while that of the EU 130 and that of Japan 120. In addition, she analysed details about the ECB's Outright Monetary Transactions (OMT), Targeted Longer-Term Refinancing Operations (TLTRO) and Asset Purchase Programmes (APP), which contributed to maintaining price stability and put a big emphasis on the criteria of convergence, confidence and resilience.

The EESC was represented at this event by Mr Javier Doz Orrit, rapporteur for the opinion on Euro area economic policy (2019), and Mr Dimitris Dimitriadis, co-rapporteur for the opinion Towards a stronger international role of the euro (on-going).

See also