Peter Praet Member of the Executive Board of the European Central Bank
Global Monetary Policies – Similarities and divergences on the way to the new normal
GIC/SUERF/Deutsche Bundesbank Conference Frankfurt am Main, 8 February 2018
Rubric Global PMI composite output and global output
Composite output PMIs: euro area, advanced economies and EMEs
(diffusion index, lhs; q-o-q % changes, rhs)
(diffusion index; monthly data) Euro area Advanced economies excl. euro area Emerging market economies
Global GDP (q-o-q percentage change, rhs) Composite output Global composite output - LT average
62
2.0
58
1.5
54
1.0
50
0.5
46
0.0
42
-0.5
60 58 56 54 52 50 48 46 44 42 40
38
38
-1.0
36 34 2007
34 2007
-1.5 2009
2011
2013
2015
2017
2011
2013
2015
2017
Sources: Haver Analytics, Markit, IMF/WEO, ECB calculations. Notes: Euro area is subtracted from Markit aggregate for advanced economies, based on GDP weights. Latest observation: January 2018
Sources: Markit, ECB calculations. Note: Long-term average refers to 1999 onwards. Latest observation: 2017 Q4 2018-02-08
2009
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Rubric HICP inflation and HICP excluding food and energy
HICP level
(annual percentage changes)
HICP
HICP HICP excl. food and energy Trend line (2%)
HICP excluding food and energy
150
4.5 4.0 3.5
140
3.0 2.5
130
2.0 1.5 1.0
1.3
120
1.0
0.5
110
0.0 -0.5
100 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
-1.0 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Source: ECB. Notes: January 1999=100 Latest observation: January 2018
Sources: Eurostat and ECB calculations. Latest observation: January 2018 2018-02-08
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Rubric Price of inflation and deflation protection (percentages per annum) Price of inflation protection
Price of deflation protection
400 350 300 250 200 150 100 50 0 2008
2010
2012
2014
2016
2018
Source: Bloomberg Note: The price of inflation (deflation) protection refers to the price of a five-year year-on-year inflation option with a 4% cap (0% floor). Latest observation: 6 February 2018 2018-02-08
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Rubric
Monetary policy stance determined by combination & interaction of:
• our policy rates, • our asset purchase programme, • and our forward guidance on each of these tools
… complemented by:
• the TLTROs, which will remain outstanding for the next three years 2018-02-08
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Rubric The ECB’s forward guidance Key ECB interest rates • expected to remain at present levels for an extended period of time • and well past horizon of net asset purchases Asset Purchase Programme (APP) • net asset purchases intended to continue at monthly pace of €30 billion, until end-Sep 2018 • or beyond, if necessary & in any case until GovC sees sustained adjustment in path of inflation (SAPI) consistent with inflation aim • if outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards SAPI, stand ready to increase APP in size and/or duration • Eurosystem will reinvest principal payments from maturing securities for an extended period of time after end of net purchases, and in any case for as long as necessary 2018-02-08
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Rubric Criteria for sustained adjustment in the path of inflation (SAPI) Convergence • Headline inflation on course to reach levels below, but close to 2% in the medium term; Confidence • Sufficient confidence in durable stabilisation of inflation around these levels; Resilience • Self-sustaining inflation developments resilient to less supportive monetary policy conditions. 2018-02-08
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