External publication

Monetary policy in the time of COVID-19, or how uncertainty is here to stay

The COVID-19 crisis has compounded the uncertainty that has come to characterise the European economy. We explore how this uncertainty manifests itsel

Publishing date
12 November 2020

This paper was prepared for the European Parliament's Requested by the ECON committee. The original paper is available on the European Parliament’s webpage, as part of a series of papers on “Effects of

Pandemic-Induced

Uncertainty on

Monetary Policy” (here). Copyright remains with the European Parliament at all times.

 

The COVID-19 crisis has compounded the uncertainty that has

come to characterise the European economy. We explore how

this uncertainty manifests itself in terms of ECB decision-making

and the long-run challenges the ECB faces. Confidence in ECB

actions will come from the contingency scenarios it considers

and communicates on, and from the adoption of potential

policies for a wide range of such scenarios. Greater clarity around

the ECB’s inflation target and surrounding tolerance bands

would also be beneficial.

This document was provided by the Policy Department for

Economic, Scientific and Quality of Life Policies at the request of

the Committee on Economic and Monetary Affairs (ECON) ahead

of the Monetary Dialogue with the ECB President on 19

November 2020.

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