Danae Kyriakopoulou, Chief Economist and Director of Research at the Official Monetary and Financial Institutions Forum, shared her article on The European Central Bank (ECB ) playing a critical role in supporting the economy during the pandemic, but now having to consider the challenges lying ahead its strategy review, which is most likely to reignite tensions within its governing council.
Although the debate on inflation revival has resurfaced in view of the size of the pandemic stimulus in the US, the ECB’s aim of inflation ‘below, but close to, 2%’ may not be fit for purpose.
Experts have stated that if the ECB is not meeting its target, it will lose credibility.
The pandemic has also prevented serious discussions of ‘normalisation’ and balance sheet unwinding.
However, experts opine that the closer Europe gets to recovery, the more pressing these questions will become, and that the announcement of the review’s conclusions will see the beginning of genuine economic recovery.