The European Central Bank (ECB) will begin the strategic review of its monetary policy next week, as announced on Thursday by the governor of the Austrian central bank, Robert Holzmann. In statements collected by “Bloomberg” during an event held in Vienna that “next week we will start a review of the monetary policy at the ECB, but I have strict orders not to say anything about it.”
Among the issues that will be discussed in the strategic review process, as Holzmann has detailed, will be the side effects of low and negative interest rates and asset purchases.
“Conventional theory says that monetary policy has a short-term impact on relative prices, but that it is neutral in the long term,” explained the Austrian, ensuring that voices begin to emerge that question this approach.
In this regard, the banker has added that “there may be several channels through which low interest rates negatively affect productivity. This, of course, would have long-term consequences.
The first ordinary monetary policy meeting of the Governing Council of the ECB, the second of Christine Lagarde’s term, will take place next week, and will therefore be officially announced at that time.
“There is nothing unusual or extraordinary in the strategic review,” Lagarde said in December, recalling that the last time the ECB carried out this process was in 2003. “16 years have passed and it is legitimate to carry it out now,” he argued.
Lagarde said that this review will be “exhaustive” and that the members of the Governing Council of the institution should “look under each stone”, so it will take time, although he promised that the process “does not last too long” and can be completed at the end of 2020..