You Know ECB Monetary Policy Is Tight When…

(1) Local communities such as this one in Spain resort to using old currency to stabilize spending.

(2) Ambrose Evans-Pritchard calls the ECB a flat-earth central bank for its handling of supply shocks and its attempt to keep kick Spain in the teeth.

(3) The ECB President says interest rates will be increased soon even though the core inflation rate declined in January and inflation expectations remained stable.

(4) An ECB Governing Council member says interest rates will rise as many as three times this year even though Eurozone nominal spending remains far below trend.

(5) Two ECB Governing Council officials say the ECB will actually tighten sooner than the what is implied in (3) even though more credit downgrades are likely and credit spreads are increasing for the Eurozone periphery.

Yep, that is what I call some tight monetary policy.

About David Beckworth 240 Articles

Affiliation: Texas State University

David Beckworth is an assistant professor of economics at Texas State University in San Marcos, Texas.

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