The ECB's Savvy Gradualism
Unlike the US Federal Reserve, the European Central Bank has no fiscal backstop and must worry about the cohesion of the eurozone, in addition to the risk of inflation. Given these complex policy conditions, ECB President Christine Lagarde's careful approach appears to be as sound politically as it is economically.
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STANFORD – This month, the world’s major central banks shifted gears and announced plans to tighten monetary policy. But there was one notable exception: the European Central Bank, which says it does not intend to raise interest rates in 2022, even though it is well aware of today’s inflation risks.