Discover and read the best of Twitter Threads about #theecbblog
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🧵Looking at inflation dynamics, the relative price dislocations caused by bottlenecks are intrinsically short-term, Chief Economist Philip R. Lane writes in #TheECBBlog. Price increases for scarce items stimulate supply, while cooling demand ecb.europa.eu/press/blog/dat…
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Lane: If disruption in supply is caused by a temporary loss of production capacity, for example a factory shutdown, a recovery in supply capacity will put downward pressure on prices once the shock has reversed
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Lane: As the pandemic comes to an end, spending on services can be expected to return to normal, which would also change the demand for goods
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(THREAD) The recent volatility of inflation can be largely attributed to the nature of the pandemic shock, writes Chief Economist Philip R. Lane on #TheECBBlog.
Read his blog post ecb.europa.eu/press/blog/dat… 1/3
Read his blog post ecb.europa.eu/press/blog/dat… 1/3
Lane: The increase in inflation during 2021 can be best interpreted as the unwinding of disinflationary forces that took hold in 2020. It does not constitute the basis for a sustained shift in inflation dynamics 2/3
Lane: Offsetting the negative shock to inflation is only the first stage of the monetary policy challenge. Even after disinflationary pressures have been sufficiently offset, we will have to ensure timely and robust convergence to our inflation aim over the medium term. 3/3
(THREAD) While the monetary policy decisions we took in March and June are providing crucial support for the economic recovery, there is no room for complacency, writes Chief Economist Philip R. Lane in #TheECBBlog ecb.europa.eu/press/blog/dat… 1/5
Following the record decline in output of 11.8 percent in the second quarter, the incoming data indicate a strong rebound in euro area economic activity during the third quarter. Domestic demand is bouncing back significantly and business investment is also recovering 2/5
Economic activity remains well below pre-pandemic levels. Although consumer spending has increased over the summer following a spectacular increase in the savings rate during the first half of the year, many households are likely to continue to be cautious 3/5
[THREAD] The announcement by the @EU_Commission on temporary equivalence for UK central counterparties is welcome, but banks must prepare for the future and all possible contingencies, says Supervisory Board Vice-Chair Yves Mersch #TheECBBlog bankingsupervision.europa.eu/press/blog/202… 1/3
Yves Mersch: The ECB will not accept banks attempting to operate as empty shells. All activities related to European products or European customers should, as a general principle, be managed and controlled from entities located in the EU bankingsupervision.europa.eu/press/blog/202… 2/3
Yves Mersch: We would like to acknowledge all the effort banks have put in to preparing for Brexit. We will continue to engage with all affected banks to ensure that they achieve their target operating models in a timely manner bankingsupervision.europa.eu/press/blog/202… 3/3
Ensuring people and firms can continue to make payments safely is an important part of our mission, writes Executive Board member Fabio Panetta in a blog post. It is vital not only for monetary policy but also for Europeans’ daily lives ecb.europa.eu/press/blog/dat… #TheECBBlog
Panetta: The crisis has made demand for cash less predictable. In mid-March it spiked, reflecting higher spending ahead of lockdowns and an impulse to hoard cash. In April cash demand decreased as confinement reduced spending opportunities.
Panetta: The ECB and the 19 euro area national central banks are well-prepared to ensure the continued availability of banknotes: we plan the activities related to the cash supply chain well in advance, adapt our processes continually and hold a strategic contingency stock.
Coronavirus represents a new form of economic shock that cannot be tackled using the textbooks of the past. In a post on #TheECBBlog, I outline how the @ECB’s policies are designed to reach those most exposed to this crisis ecb.europa.eu/press/blog/dat… (1/3)
Our response will be made more powerful if all policies reinforce each other. It is vital that the fiscal response to this crisis is undertaken with sufficient force in all parts of the euro area (2/3)
Full alignment of fiscal and monetary policies - and a level playing field against the virus - is the best way to protect our productive capacity and employment, enabling us to return to sustainable growth and inflation rates once the coronavirus outbreak passes (3/3)
