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The price stability oriented monetary policy of the ECB: an assessment

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  • Claudio Morana

Abstract

The definition of price stability adopted by the ECB has recently been criticized in the literature, particularly for being unable to fully anchor inflation expectations and creating a deflation risk. In the paper empirical evidence is provided against these claims. Despite the unfavourable macroeconomic conditions for the euro area since 2001, monetary policy management has lead to the setting of the policy rate at levels compatible with trend inflation (the long-run inflation forecast) in the range 1-3%, and therefore without affecting negatively the inflation outlook.

Suggested Citation

  • Claudio Morana, 2006. "The price stability oriented monetary policy of the ECB: an assessment," Applied Economics, Taylor & Francis Journals, vol. 38(17), pages 2007-2020.
    • Handle: RePEc:taf:applec:v:38:y:2006:i:17:p:2007-2020
    DOI: 10.1080/00036840500427312
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    References listed on IDEAS

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    1. Bruggeman, Annick & Donati, Paola & Warne, Anders, 2003. "Is the demand for euro area M3 stable?," Working Paper Series 255, European Central Bank.
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