Favourable developments and new concerns in the global economy The euro area economy has now benefited from four years of unbroken growth, and this is expected to continue. The evolution of the global economy will be affected by the economic policy of the new US administration. A potential increase in protectionist actions may impair the expansion of the global economy and trade. Share Email Twitter Facebook Linkedin Google+
Euro area money markets undergoing huge changes Repo rates are at an exceptionally low level, and market participants are only just growing accustomed to the post-financial crisis environment. Share Email Twitter Facebook Linkedin Google+
Frequency of rising and falling prices in the euro area The flexibility of relative prices constitutes a key element of the dynamics of the economy. The same inflation rate may mask very different trends in relative prices. Share Email Twitter Facebook Linkedin Google+
Temporary factors have fuelled euro area inflation Inflation has recently accelerated largely due to the rise in the price of oil. When assessing the medium-term trend in inflation it is important to consider core inflation, which better reflects the euro area’s internal cost pressures. Share Email Twitter Facebook Linkedin Google+
Have market inflation expectations strengthened? Estimated on the basis of inflation swaps, euro area inflation expectations have increased. Interpretation of inflation swaps is not, however, a straightforward matter, as the price of an inflation swap can be affected by, for example, its risk level. Share Email Twitter Facebook Linkedin Google+
ECB’s expanded asset purchase programme has supported growth in Finland The expanded asset purchase programme has also had a significant effect on price developments: in its absence, inflation in 2016 would have been much slower. Share Email Twitter Facebook Linkedin Google+
ECB purchase programme expanded to include corporate bonds In March 2016, the Governing Council of the ECB also included corporate bonds in the expanded asset purchase programme. The purchases are carried out by six national central banks, including the Bank of Finland, acting on behalf of the Eurosystem. Share Email Twitter Facebook Linkedin Google+
The natural rate of interest – a useful but uncertain indicator for the economy During the last 10 years, the natural rate of interest in the advanced economies is estimated to have declined substantially. However, estimates of the level of the natural rate of interest are uncertain, which hampers the use of this interest rate as a monetary policy guide. Share Email Twitter Facebook Linkedin Google+
Three months after the Brexit vote – the current state of play The effects of Brexit on the real economy will be evident only later. Three months after the referendum, the UK has still not notified the European Council of its intention to leave and is still an official EU member state. Share Email Twitter Facebook Linkedin Google+
Growth overshadowed by hard-to-quantify risks Euro area monetary policy has been relaxed substantially in recent years. The expanded asset purchase programme has progressed according to plan and brought about a broadly based reduction in interest rates in the euro area. Share Email Twitter Facebook Linkedin Google+
Abenomics: three years – the big ship turns slowly Japan’s economy has so far been growing sluggishly, but the deflationary trend has been successfully cut and structural reforms taken forward. Share Email Twitter Facebook Linkedin Google+
Global growth pains The euro area economy has continued to recover. Despite the positive developments, inflation in 2015 was zero. The low inflation is primarily due to the low price of oil. Share Email Twitter Facebook Linkedin Google+
Analysis: What is the effect of unconventional monetary policy on asset prices? Major central banks have cut interest rates close to zero and introduced non-standard policy measures. What are the theoretical foundations of these policies and what do we know about their effects on financial asset prices? Share Email Twitter Facebook Linkedin Google+
Structural reforms can provide an answer to lean years in global economy The ’Great Recession’ has lasted seven years now, with a permanent weakening in economic growth. Structural reforms are now needed to kick-start growth. Share Email Twitter Facebook Linkedin Google+
Euro area set to recover Euro area monetary policy has been highly accommodative, and the euro area economy is getting back on track. An abrupt halt in the Chinese economy would be the greatest risk to euro area growth. The articles were first published in Finnish on 24 September 2015. Share Email Twitter Facebook Linkedin Google+
How can we simultaneously maintain both price and financial stability in the euro area? The strengthening of economic growth via monetary policy measures does also support financial stability. Share Email Twitter Facebook Linkedin Google+
Finland benefits from Eurosystem’s securities purchases The effects of the Eurosystem’s expanded asset purchase programme (EAPP) are already visible on the financial markets. To a small open economy such as Finland, the effects of the programme are transmitted particularly via lower market interest rates and a weaker exchange rate. Share Email Twitter Facebook Linkedin Google+
Is the euro area at risk of Japanese-style deflation? Euro area inflation has long been below the European Central Bank’s objective for price stability and has continued to slow in recent months. This has given rise to heightened concerns that the euro area could soon be facing a prolonged period of deflation, as recently in Japan. Share Email Twitter Facebook Linkedin Google+
The financial crisis changed the instruments but not the objectives of monetary policy Central banks have acted forcefully to provide monetary accommodation. With little room for manoeuvre for standard interest rate policy, unconventional measures have been adopted. Share Email Twitter Facebook Linkedin Google+
Monetary policy supports euro area recovery from the crisis The decision by the ECB Governing Council to ease monetary policy through an expanded asset purchase programme will boost demand and accelerate inflation via a number of different channels. Share Email Twitter Facebook Linkedin Google+
