'We say monetary policy will remain accommodative for as long as we need it and we really mean it' - Peter Praet, ECB executive board member
Central banks all over the world are getting more and more predictable as there were no surprises from policymakers so far this year. Moreover, more of them is trying to stick to the forward guidance that decreases the level of uncertainty among investors, hence, markets remain under control. This week one of the ECB members, Peter Praet, said the European Central Bank will maintain its ultra-loose monetary policy for as long as it is needed to assure stable growth.
Regarding possible future moves that can be implemented, Praet mentioned a new solution– outright monetary transactions, or the so-called OMTs that has been a topic for speculations for a long time already. In case the ECB launches OMTs, it can remove break-up fears from financial markets, as well as promote more regular financial conditions in the region. While praising such a supportive measure, Praet also pointed out they are less effective than a rate cut, for example, as they should be followed by a set of structural reforms. Currently investors are making their bets on what tool will be used next, as interest rates are already around zero. According to Praet, the main task of all Eurozone policymaker is to ensure that confidence among investors and market participants will be validated by actual outcomes in the region.
Central banks all over the world are getting more and more predictable as there were no surprises from policymakers so far this year. Moreover, more of them is trying to stick to the forward guidance that decreases the level of uncertainty among investors, hence, markets remain under control. This week one of the ECB members, Peter Praet, said the European Central Bank will maintain its ultra-loose monetary policy for as long as it is needed to assure stable growth.
Regarding possible future moves that can be implemented, Praet mentioned a new solution– outright monetary transactions, or the so-called OMTs that has been a topic for speculations for a long time already. In case the ECB launches OMTs, it can remove break-up fears from financial markets, as well as promote more regular financial conditions in the region. While praising such a supportive measure, Praet also pointed out they are less effective than a rate cut, for example, as they should be followed by a set of structural reforms. Currently investors are making their bets on what tool will be used next, as interest rates are already around zero. According to Praet, the main task of all Eurozone policymaker is to ensure that confidence among investors and market participants will be validated by actual outcomes in the region.
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