Ten years after the financial crisis, the world’s major central banks are facing the difficult task of supporting economic growth with limited room for maneuver in the area of monetary policy.
Central banks may use conventional or unconventional forms of monetary policy. Whichever is chosen by the European Central Bank (ECB) it influences all Central and Southeast European (CSE) countries.
Since 1990, Poland has adopted almost all possible exchange rate regimes, starting with a fixed rate, through a crawling peg, and finally a free floating rate.
The economy needs inflation. Striving for optimal inflation means striving for economic growth. The ECB is struggling to meet its inflation target and there is nothing more to resort to if the recession finally comes, says Prof. Klaus Adam.
The Ukrainian government should seek a new support program with the International Monetary Fund (IMF) of up to USD10bn, with a duration of up to four years, the National Bank of Ukraine (NBU) believes.
For over half a century economists talk about the imminent decline in the importance of the USD. However, there are currently no indications that this could become true anytime soon.
A series of severe financial crises over the past decade has undermined the confidence of the Belarusian population in their domestic currency. The level of FX savings there is even higher than in Ukraine.
Low fertility and increasing life expectancy in most of the world's economies are causing a decline in the natural interest rate. Too restrictive monetary policy may increase the risk of the economy falling into a deflationary trap.
“If we were to only take into account the wishes of selected members of the Eurozone, we could act faster, but that is impossible,” says Ewald Nowotny, the Governor of the Austria’s central bank, OeNB.
Changes in short-term interest rates have a significant impact on the economy, but the size of this impact is curbed by a relatively small role of credit as a source of financing for Polish enterprises.
