Inflation remains persistent and high, well above the 2% target. In March 2023, the euro area harmonized index of consumer prices (HICP) stood at 6.9 per cent while core inflation continued to increase. Wage pressures have strengthened—in the fourth quarter of 2022, hourly labour costs rose by 5.7% in the euro area and by 5.8 % in the EU, compared with the same quarter of the previous year—on the back of robust labour markets and employees aiming to recoup some of the real purchasing power they have lost to high inflation.
This session will assess the next steps the ECB should take to address persistently high inflation in the current context of delicate financial stability and low growth. Speakers will also be invited to express their views on monetary policy measures that would allow short-, medium-, and long-term interest rates to be determined by market forces rather than by central banks.
Points of discussion
- What steps should the ECB take to address persistent and high inflation? Are real interest rates still significantly below where they need to be?
- Is it the role of a central bank to influence the entire rate curve? Recalling how the United States exited with its “”Accord”” after the Second World War, should the ECB now be more assertive on QT? Should QT be supported by rising reserve requirements to hasten the drainage of liquidity? What is the desired long-run size of the Eurosystem balance sheet?