Speech by Piero Cipollone, Member of the Executive Board of the ECB, at an MNI Connect webcast Today I would like to discuss the ECB’s balance sheet and its implications for our monetary policy. In recent years, the monetary policy debate has mainly focused on our interest rate decisions. This is for good reason. In response to the biggest inflation shock in a generation, we embarked on the fastest tightening of monetary policy in the ECB’s history through rate hikes. During this...

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Banking systems are largely insulated from inflation, but vulnerabilities at some banks could lead to tradeoffs between containing inflation and protecting financial stability Before the pandemic, investors worried about how persistently low inflation and interest rates would crimp bank profits. Paradoxically, they also worried about bank profitability when post-COVID reopening sent inflation and central bank interest rates soaring. The failure of Silicon Valley Bank and other US lenders in early 2023 appeared to validate these fears. Our new research on the relationship...

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Each year, the EIB Investment Survey provides a snapshot of the issues facing EU firms and their ability to invest and grow their business. While the survey looks at trends across the European Union, it also hones in on individual countries and provides detailed information on how companies are weathering challenges such as tighter financial conditions, the demands of climate change, and the need to innovate and improve digitalisation amidst growing uncertainty. Highlights of the results for individual countries include: Digitalisation...

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NEW YORK—The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the January 2025 Survey of Consumer Expectations, which shows that inflation expectations were unchanged at the short- and medium-term horizons, and increased at the longer-term horizon. Commodity price expectations rose across the board, with the expected price change for gas, food, medical care, education, and rent all increasing. Labor market expectations were mixed, with job loss and job finding expectations both rising and unemployment expectations falling...

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By Marinela-Daniela Filip, Daphne Momferatou and Susana Parraga-Rodriguez | At the heart of the euro area’s competitiveness challenges lies weak productivity growth. The ECB Blog looks at how this makes it more difficult to carry out monetary policy. While companies in the euro area are getting more productive, they are doing so at a much slower pace than their competitors. Weak productivity growth is putting monetary policy in a difficult situation. When the economy struggles to grow and loses competitiveness...

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Prepared by Claus Brand, Noëmie Lisack and Falk Mazelis Estimates of the natural rate of interest, or r*, show trends that are of fundamental significance for monetary policy, but are subject to important caveats. r* is defined as the real rate of interest that is neither expansionary nor contractionary. Measures of r* are typically constructed as an equilibrium value towards which interest rates tend to gravitate in the medium to long term, as aggregate saving and investment imbalances abate and the...

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The gap between development financing needs and available resources could swell to USD 6.4 trillion by 2030 without a major overhaul of the financing system, according to a new OECD report. The Global Outlook on Financing Sustainable Development 2025: Towards a more resilient and inclusive architecture shows that although total external finance to developing countries reached USD 5.24 trillion in 2022, it remained significantly below the USD 9.24 trillion estimated to be required annually to achieve the 2030 Agenda. Financing needs have risen...

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The Federal Reserve Board on Wednesday released the hypothetical scenarios for its annual stress test, which helps ensure that large banks can lend to households and businesses even in a severe recession. Additionally, the Board released two hypothetical elements designed to probe different risks through its "exploratory analysis" of the banking system. The exploratory analysis will not affect bank capital requirements. The Board's annual stress test evaluates the resilience of large banks by estimating losses, net revenue, and capital levels—which...

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Blog post by By Stefan Gebauer, Georgios Georgiadis, Fédéric Holm-Hadulla and Thomas Kostka | The monetary policies of the ECB and the US Federal Reserve are not always in sync. But how does the Fed’s policy affect the euro area economy? This ECB Blog looks at how monetary policy in the United States travels across the Atlantic and what this means for the ECB. The global economy is interconnected. Central banks’ monetary policies therefore often affect other economies. These “monetary policy spillovers”...

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Blog post by Christine Lagarde, President of the European Central Bank, and Ursula von der Leyen, President of the European Commission | Remaining competitive is fundamental for Europe’s future. We need faster economic growth and higher productivity to protect the quality of life for Europeans – from their jobs and incomes to their security and welfare. Europe must act. Our competitiveness is at risk. While a global revolution in artificial intelligence unfolds, the EU could find itself on the sidelines....

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