Exchange of letters between the Governor and the Chancellor on the Asset Purchase Facility - April 2024
Exchange of letters between the Governor and the Chancellor
Financial institutions
Monetary policy strategies to navigate post-pandemic inflation: an assessment using the ECB’s New Area-Wide Model
We evaluate how the euro area economy would have performed since mid-2021 under alternative monetary policy strategies. We use the ECB’s workhorse estimated DSGE model and contrast actual policy conduct against alternative strategies which differ in their ”lower-for-longer” commitment as well as policymaker preferences regarding inflation and output volatility.
Macro and micro of external finance premium and monetary policy transmission
We establish basic facts about the external finance premium. Tens of millions of individual loan contracts extended to euro area firms allow studying the determinants of the external finance premium at the country, bank, firm, and contract levels of disaggregation. At the country level, the variance in the premium is closely linked to sovereign spreads, which are important in understanding financial amplification mechanisms. However, country-level differences only explain half of the total variance.
Monetary policy strategies to navigate post-pandemic inflation: an assessment using the ECB’s New Area-Wide Model
We evaluate how the euro area economy would have performed since mid-2021 under alternative monetary policy strategies. We use the ECB’s workhorse estimated DSGE model and contrast actual policy conduct against alternative strategies which differ in their ”lower-for-longer” commitment as well as policymaker preferences regarding inflation and output volatility.
Macro and micro of external finance premium and monetary policy transmission
We establish basic facts about the external finance premium. Tens of millions of individual loan contracts extended to euro area firms allow studying the determinants of the external finance premium at the country, bank, firm, and contract levels of disaggregation. At the country level, the variance in the premium is closely linked to sovereign spreads, which are important in understanding financial amplification mechanisms. However, country-level differences only explain half of the total variance.
Minutes of the Meeting of the Court of Directors held on 7 February and 4 March 2024
The Bank's Court of Directors acts as a unitary board, setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. Required to meet a minimum seven times per year, it has five executive members from the Bank and up to nine non-executive members.
Liz Oakes appointed and Carolyn Wilkins reappointed to the Financial Policy Committee
Liz Oakes has been appointed and Carolyn Wilkins has been reappointed as external members of the Financial Policy Committee (FPC), the Chancellor of the Exchequer, Jeremy Hunt, has announced today.
The reformed EU fiscal framework – potential macroeconomic implications for the euro area
Following the European Commission’s legislative proposals of April 2023, the ECOFIN Council reached an agreement on the reform of the fiscal rules underpinning the EU Stability and Growth Pact (SGP) on 20 December 2023. This box provides a preliminary assessment of the potential macroeconomic effects of the EU fiscal framework reform over the horizon of the March 2024 ECB staff macroeconomic projections for the euro area.
The role of technical factors in euro area inflation-linked swap rates
When long-term inflation-linked swap (ILS) rates for the euro area peaked in summer 2023, some observers expressed concerns that ILS rates reflected not only inflation compensation, but also non-fundamental “technical” factors. Such factors potentially reduced the usefulness of ILS rates in terms of gauging inflation expectations and risks. This box contributes to that discussion using a novel econometric approach, suggesting that there is, on average, little scope for technical factors to affect ILS rates.
Decomposing HICPX inflation into energy-sensitive and wage-sensitive items
Changes in energy prices and wage costs can, to the extent these are passed through to consumer prices, have important effects on HICP inflation excluding energy and food (HICPX). Data from different sources can be matched to obtain the cost shares of energy and wages in various sectors.
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