The concept of flexible average inflation targeting could potentially be too vague and might make it difficult to firmly anchor inflation expectations around the target

Dr. Elga Bartsch: My vote in terms of the policy stance would be in favour of leaving interest rates unchanged and of stepping up the asset purchase program by about 500 billion.

In terms of the strategy review, what has been announced by the Federal Reserve is potentially problematic in the long-term because the concept of flexible average inflation targeting could potentially be too vague to clearly define the extent of an inflation overshoot that would be acceptable in the view of the FOMC. This might make it difficult to firmly anchor inflation expectations around the target. In addition, the way in which the FOMC seems to view its second objective of full employment within its new strategy, suggest that they will no longer consider the labour market is a leading indicator for future inflation. This could cause the Fed to end up with letting the US economy run too hot.

The ECBs Strategy review has a slightly broader remit (e.g. also includes climate change issues) than the one the Federal Reserve conducted and also need to tackle a different set of issues. One of the aspects that the ECB will need to clarify and to codify in the strategy framework is the symmetry of its price stability norm. In addition, the ECB should consider, as they did in the last strategy review, whether the numerical target is correctly calibrated. Finally, the ECB should also become more deliberate about how to best coordinate policy efforts with fiscal authorities within the context of the current treaty.

Regarding its secondary mandate to support EU economic policies, the ECB does not have a lot of room for manoeuvre given the lexicographic order defined in the treaty. It could however stress its secondary objectives more in its communication especially when it addresses the broad public rather than financial experts.
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	03.09.2020 The concept of flexible average inflation targeting could potentially be too vague and might make it difficult to firmly anchor inflation expectations around the target >> GROUP: Shadow ECB Council / EZB-Schattenrat Dr. Elga Bartsch Tweet Teilen Dr. Elga Bartsch: My vote in terms of the policy stance would be in favour of leaving interest rates unchanged and of stepping up the asset purchase program by about 500 billion. In terms of the strategy review, what has been announced by the Federal Reserve is potentially problematic in the long-term because the concept of flexible average inflation targeting could potentially be too vague to clearly define the extent of an inflation overshoot that would be acceptable in the view of the FOMC. This might make it difficult to firmly anchor inflation expectations around the target. In addition, the way in which the FOMC seems to view its second objective of full employment within its new strategy, suggest that they will no longer consider the labour market is a leading indicator for future inflation. This could cause the Fed to end up with letting the US economy run too hot. The ECBs Strategy review has a slightly broader remit (e.g. also includes climate change issues) than the one the Federal Reserve conducted and also need to tackle a different set of issues. One of the aspects that the ECB will need to clarify and to codify in the strategy framework is the symmetry of its price stability norm. In addition, the ECB should consider, as they did in the last strategy review, whether the numerical target is correctly calibrated. Finally, the ECB should also become more deliberate about how to best coordinate policy efforts with fiscal authorities within the context of the current treaty. Regarding its secondary mandate to support EU economic policies, the ECB does not have a lot of room for manoeuvre given the lexicographic order defined in the treaty. It could however stress its secondary objectives more in its communication especially when it addresses the broad public rather than financial experts. >> Kontakt Zum aktuellen TEEC-Impuls		Benutzername Passwort >> Ich bin kein Mitglied und bitte um einen Testzugang
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