In view of the high inflation, the central bank is coming under pressure.
(Photo: Reuters)
Frankfurt Why aren’t monetary policymakers doing more to combat inflation? Consumers, who are confronted with higher prices, and savers, who are confronted with dwindling credit balances in real terms, are rightly asking this.
The discussion is often conducted ideologically or with the assumption that the European Central Bank (ECB) is not intervening more energetically because it does not want to endanger highly indebted countries in the euro area.
In fact, the ECB needs to keep the overall economic picture in mind when making decisions. Another important point is that although it has many instruments, they all have one shortcoming – they can almost only influence the demand side of the economy, but not the supply side. An overview:
What can the ECB do?
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