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Int. J. Financial Stud. 2017, 5(2), 12; doi:10.3390/ijfs5020012

The ECB’s Fight against Low Inflation: On the Effects of Ultra-Low Interest Rates§

Directorate Monetary Policy, European Central Bank (ECB), Sonnemannstrasse 20, 60314 Frankfurt am Main, Germany
§
The views expressed in this article are those of the author and should not be reported as representing the views of the ECB.
Academic Editor: Nicholas Apergis
Received: 14 December 2016 / Revised: 6 March 2017 / Accepted: 8 March 2017 / Published: 7 April 2017
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Abstract

Starting in June 2014, the European Central Bank (ECB) stepped up its monetary accommodation in order to counter a too prolonged period of low inflation in the euro area. This article offers a narrative of the monetary policy measures taken up to December 2016 and a review of the effects of ultra-low interest rates. The exceptional monetary stimulus transmitted to the economy broadly as intended. Moreover, it enhanced the financial capacity of economic agents to bear risks. At the same time, the ECB and the European micro- and macro-prudential authorities remained watchful of the unintended side-effects of an extended period of very low or negative interest rates for financial intermediation, financial stability and market discipline and took preventive or corrective measures as appropriate. A joint plan of action carried out by the 19 member countries with the aim to speed up balance sheet repair, accelerate the economic recovery and achieve higher productivity growth could have contributed to a more effective euro area macroeconomic and financial policy mix. View Full-Text
Keywords: ECB monetary policy; quantitative easing; negative interest rates; financial stability ECB monetary policy; quantitative easing; negative interest rates; financial stability
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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van Riet, A. The ECB’s Fight against Low Inflation: On the Effects of Ultra-Low Interest Rates. Int. J. Financial Stud. 2017, 5, 12.

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Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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