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Comparing Fed and ECB monetary policies
The European Central Bank and Federal Reserve have taken similar approaches to tightening monetary policy to tackle high inflation. However, relative to the US, euro area inflation has been driven more by supply shocks and less by strong demand. The euro area economy is also weakening while the US economy is still growing solidly. Markets expect the Fed to ease more than the ECB in 2024 but falling inflation and a weak euro area economy may see the opposite occur. This document was provided by ...
Low-carbon allocation in monetary policy implementation
This paper analyses how the European Central Bank (ECB) can incorporate climate change considerations in its monetary policy implementation. It reviews the impact of climate shocks on inflation and the instruments to decarbonise the ECB’s asset and collateral portfolio. The paper concludes with recommendations for the ECB to increase the low-carbon allocation in its monetary policy framework. This will in turn speed up the green transition and decrease the euro area’s fossil fuel dependency. This ...
Ensuring food security and long-term resilience of EU agriculture
During its June plenary session, Parliament is due to debate the report of the Committee on Agriculture and Rural Development (AGRI) on Ensuring food security and the long-term resilience of EU agriculture. Parliament is also to vote on policy recommendations to address global and EU food security and strengthen the EU's agricultural resilience.
Inflation and inequality
Inflation is often confused with changes in relative prices. The recent sharp increase in energy prices, which has also pushed up food prices, has hit poorer households especially hard, thus creating the impression that inflation increases inequality. However, it is the large changes in relative prices and not the average inflation rate (of now 7%) that is the real problem. We also show that rents – which are more important for low-income households – provide a significant offset for higher energy ...
Prospects for monetary policy one year into the war in Ukraine- compilation of papers
24 February 2023 marked one year since the start of the Russian invasion of Ukraine. Before the war, starting in 2021, the euro area was experiencing inflationary pressure attributed to supply-side factors, in particular to pandemic-related supply chain disruptions. The war in Ukraine amplified inflationary pressures through energy and food prices, later feeding into goods and services inflation. Later in 2022, the relative contribution of demand-side factors became more prominent. With the recent ...
The direct and indirect impacts of the war on inflation
The paper explores the possible direct and indirect impacts of the Russian war in Ukraine on different measures of inflation in the euro area. It notably shows that the core inflation index is sensitive to energy and food prices, and questions its reliability for policy decisions. Finally, we discuss medium-term inflation prospects and the effectiveness of monetary policy measures. This paper was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic ...
Summary of recent ECB monetary policy decisions
This briefing provides a recap of the key monetary policy decisions taken by the European Central Bank’s (ECB’s) Governing Council between December 2022 and February 2023, as complementary information to the briefing provided after the November 2022 Monetary Dialogue with the ECB President.
Question time: The impact on third countries of Russia's war on Ukraine in relation to the 'Black Sea Grain Initiative' agreement
Russia's unprovoked invasion of Ukraine triggered fears of an unprecedented global food crisis, adding to the devastating impact of the war. A swift response by the international community, including the United Nations–Türkiye-brokered Black Sea Grain Initiative, has been instrumental in unblocking Ukrainian food exports and stabilising the markets. Combined with the EU solidarity lanes launched in May 2022, more than 25 million tonnes have been exported. On 17 November, Russia confirmed, in extremis ...
Russia's war on Ukraine: Impact on global food security and EU response
Besides huge human losses and destruction, Russia's unprovoked invasion of Ukraine – the 'breadbasket of Europe' – has triggered energy and food supply challenges, exacerbating existing food systems vulnerabilities, already weakened under the effect of climate change and the COVID 19 pandemic. Fears of an unprecedented global food crisis similar to, or even worse than, the 2007 2008 crisis have mounted, magnifying ripple effects for security, migration and political instability. The supply shock ...
Russia’s war on Ukraine and food security [What Think Tanks are thinking]
Russia’s war on Ukraine has sent global food prices soaring. It has fuelled inflation in the European Union, the United States and many other countries, while threatening hunger in some poorer regions. Russia and Ukraine play a major role in food and fertiliser supply. They export about 30 per cent of the world’s wheat and 75 per cent of its sunflower oil. Some countries in Africa and the Middle East are nearly 100-per cent dependent on Russian or Ukrainian food. According to the United Nations Food ...