How Effective Is What’s Left in ECB's Toolbox?

The transcript discusses the European Central Bank's (ECB) potential actions regarding asset purchases and rate cuts, based on a Bloomberg survey. It examines inflation expectations, particularly the five-year forward inflation swap, and its correlation with commodity prices. The effectiveness of ECB's monetary policy is questioned, noting that initial measures are more impactful than subsequent ones. The discussion also touches on the euro's role as a secondary instrument and the need for policy flexibility to address economic risks.

What percentage of economists, according to the Bloomberg survey, expect asset purchases to be expanded?

• 85%

• 73%

• 50%

• 90%

What is the five-year forward inflation swap strongly correlated with?

• Interest rates

• Commodity prices

• Government bonds

• Stock market trends

What is the ECB's stance on targeting the euro directly?

• They ignore it completely

• They target it directly

• They treat it as a primary instrument

• They treat it as a secondary instrument

What tends to happen with the effectiveness of monetary policy tools over time?

• They become more effective

• They remain equally effective

• They become less effective

• They have no effect

What is one way the ECB could signal policy flexibility?

• By expanding the range of assets that can be purchased

• By reducing interest rates

• By cutting government spending

• By increasing taxes