European Central Bank (ECB) is seen as a political actor rather than a standard central bank, with concerns raised about the EU's resistance to fiscal sovereignty. Experts warn that the current monetary policy may not be equipped to handle 'shockflation' caused by sudden spikes in prices and profits, advocating for new tools to address the issue. Calls are made for the EU to develop a new inflation governance framework targeting significant price shocks directly, as traditional monetary policy may have limited effectiveness in such scenarios.
(must-read) @ECB ’s monetary policy is not an adequate instrument to deal with this kind of inflation - #EU should develop a new inflation governance framework that targets shocks to systemically significant prices directly @IsabellaMWeber @jvtklooster https://t.co/BA8SjHLlnS https://t.co/d4fehsF88R
📄My paper for @AgencEurope on a recent analysis by @jvtklooster and @IsabellaMWeber who argue that monetary policy alone has got limited leverage to deal with “shockflation”, and who propose a new model of governance 📄You can read their analysis here: https://t.co/gDFz4P0psq https://t.co/sAQ6d6WyME
Thanks @ChrisGiles_ for flagging our new European Parliament report urging for an inflation fighting toolbox fit for a world of shocks @ft! Emergency preparedness usually seems “utterly unnecessary” until the moment comes. https://t.co/E049OYt5so
The EU’s monetary policy is designed to fight wage-price spirals & to look through shocks. This leaves us unprepared for shockflation unleashed by price & profit spikes in essentials. New tools are urgently needed in an age of polycrisis argue @jvtklooster & I @Grand_Continent. https://t.co/e0yMgJDzoe
‘The ECB isn’t a normal central bank; it’s a full-blooded political actor.’ Will the EU continue to block attempts for fiscal sovereignty, asks @battleforeurope: 👇 https://t.co/FiseoYIf9Z