On July 8th the European Central Bank announced the results of the Monetary Policy Strategy Review initiated by its president, Christine Lagarde, in January 2020. Delayed by the pandemic, its deliberations had been kept tight. But, with striking haste, Lagarde shepherded the ECB’s General Council into unanimous agreement on a terse statement about the bank’s policy regime.
The review’s conclusions are technical but have wide implications. The ECB is Europe’s most powerful federal institution. At moments of financial stress it holds Europe’s fate in its hands. In normal times, interest rates are a key parameter for decision-making of all kinds.
The results of the review, modest though they may seem, are highly revealing not just about the ECB but the broader politics of eurozone. It is 18 years since the bank last conducted a strategic review and there has been plenty in the interim to digest. What is more telling than what appears in the final communiqué, however, are those aspects of the ECB’s experience which could not be assimilated into official doctrine.
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