As part of our monetary policy strategy review we adopted a new symmetric 2% inflation target. One year on, we examine how the strategy review has helped anchor financial analysts’ inflation expectations. We also show that recent policy normalisation is grounded in our strategy. A year ago the Governing Council of the ECB published its new monetary policy strategy. Since then, the monetary policy environment has changed completely. The war in Ukraine and the reopening of the economy as the...

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During the pandemic, central banks in both advanced and emerging market economies took unprecedented measures to ease financial conditions and support the economic recovery, including interest-rate cuts and asset purchases. With inflation at multi-decade highs in many countries and pressures broadening beyond food and energy prices, policymakers have pivoted toward tighter policy. As our Chart of the Week shows, central banks in many emerging markets proactively started to hike rates earlier last year, followed by their counterparts in advanced economies...

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Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy / Vice-President of the European Commission | HR/VP Blog - Europe is facing a perfect storm: energy prices are up, economic growth is down and winter is coming. The Kremlin is using energy as a political weapon. We must prepare ourselves for a possible gas cut-off, principally through savings, diversification and solidarity among us. At the same time, we must accelerate investments in renewables and wage...

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As of today, all Member States must apply EU-wide rules to improve work-life balance for parents and carers adopted in 2019. These rules set out minimum standards for paternity, parental and carers' leave and establish additional rights, such as the right to request flexible working arrangements, which will help people develop their careers and family life without having to sacrifice either. These rights, which come in addition to existing maternity leave rights, were achieved under the European Pillar of...

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The European Commission, on behalf of the EU, has today disbursed the first half (€500 million) of a new €1 billion macro-financial assistance (MFA) operation for Ukraine. The second tranche (another €500 million) will be disbursed tomorrow, 2 August. The decision about this new exceptional MFA was adopted by the European Parliament and the Council on 12 July 2022. This additional MFA of €1 billion is part of the extraordinary effort by the EU, alongside the international community, to help...

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Upside risks to the inflation outlook remain large, and more aggressive tightening may be needed if these risks materialize. Central banks in major economies expected as recently as a few months ago that they could tighten monetary policy very gradually. Inflation seemed to be driven by an unusual mix of supply shocks associated with the pandemic and later Russia’s invasion of Ukraine, and it was expected to decline rapidly once these pressures eased. Now, with inflation climbing to multi-decade highs and...

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'The war in Ukraine and resulting increase in commodity prices are expected to contribute to a further widening this year.' The lingering pandemic and Russia’s invasion of Ukraine are dealing a setback to the global economy. This is affecting trade, commodity prices, and financial flows, all of which are changing current account deficits and surpluses. Global current account balances—the overall size of deficits and surpluses across countries—are widening for a second straight year, according to our latest External Sector Report. After...

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"With fossil fuels likely to remain expensive for some time, governments should let retail prices rise to promote energy conservation while protecting poorer households." Soaring energy prices have sharply increased living costs for Europeans. Since early last year, global oil prices doubled, coal prices nearly quadrupled and European natural gas prices increased almost seven-fold. With energy prices likely to remain above pre-crisis levels for some time, Europe must adapt to higher import bills for fossil fuels. Governments cannot prevent the loss...

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Today the European Commission published the results of the 2022 Digital Economy and Society Index (DESI), which tracks the progress made in EU Member States in digital. During the Covid pandemic, Member States have been advancing in their digitalisation efforts but still struggle to close the gaps in digital skills, the digital transformation of SMEs, and the roll-out of advanced 5G networks. The Recovery and Resilience Facility, with about €127 billion dedicated to reforms and investments in the area of digital,...

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The European Commission, on behalf of the EU, has today disbursed the first half (€500 million) of a new €1 billion macro-financial assistance (MFA) operation for Ukraine. The second tranche (another €500 million) will be disbursed tomorrow, 2 August. The decision about this new exceptional MFA was adopted by the European Parliament and the Council on 12 July 2022. This additional MFA of €1 billion is part of the extraordinary effort by the EU, alongside the international community, to help...

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