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ECB Monetary Policy in a Tight Spot – Can More “Forward Guidance” Help?

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  • Timo Wollmershäuser

Abstract

The European Central Bank’s monetary policy is in a tight spot. Economic developments in the euro area are so different that only few countries would be satisfied with any further reduction in the interest rate. This article discusses whether the ECB has any further scope in the context of its communication policy to further stabilise economic developments in the euro area, despite the existing zero interest rate limit. The focus is on so-called “forward guidance”, a special form of expectation management, which features statements by the monetary policy decision-making body with respect to the forecast duration of its current low interest rate policy.

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  • Timo Wollmershäuser, 2013. "ECB Monetary Policy in a Tight Spot – Can More “Forward Guidance” Help?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 66(22), pages 35-45, November.
    • Handle: RePEc:ces:ifosdt:v:66:y:2013:i:22:p:35-45
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    1. Timo Wollmershäuser & Wolfgang Nierhaus & Nikolay Hristov & Tim Oliver Berg & Christian Breuer & Johanna Garnitz & Christian Grimme & Atanas Hristov & Robert Lehmann & Wolfgang Meister & Magnus Reif &, 2016. "Ifo Economic Forecast 2016/2017: Upturn in Germany Enters Second Half," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(12), pages 21-57, June.

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    More about this item

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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