Rethinking Quantitative Easing: ECB's Strategic Shift
The European Central Bank (ECB) plans to limit massive bond purchases to exceptional situations only, following significant losses. Policymakers, including Bundesbank's Joachim Nagel, are reconsidering the past aggressive monetary policy due to the side effects. The ECB is now reviewing its strategy on quantitative easing.
- Country:
- Germany
The European Central Bank (ECB) has announced a strategic review of its monetary policy, with particular scrutiny on massive bond buying practices. This shift comes after the ECB reported significant losses from such measures, prompting policymakers to advocate for their use only in exceptional cases.
Joachim Nagel, Bundesbank's president, joined other ECB policymakers in suggesting a move away from aggressive money printing, particularly after years of low inflation. The ECB is updating its long-term strategy, considering lessons learned from quantitative easing as an announcement looms.
Between 2014 and 2021, the ECB engaged in extensive asset purchases totaling 5 trillion euros. The policy faced criticism for inflating property and financial market bubbles. As inflation rises, the ECB acknowledges the need for policy diversification, favoring interest rates over quantitative easing in the future.
(With inputs from agencies.)
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