Lagarde: Fiscal Measures Effective Against ECB Policy Side Effects

The transcript discusses the implications of prolonged accommodative measures, highlighting the risks and effects of low interest rates on savings, asset valuation, and house prices. It also covers the Governing Council's decision to introduce a new regime for bank reserves and emphasizes the role of fiscal and structural policies in boosting productivity and growth, especially in a low-interest environment.

What are some potential side effects of prolonged accommodative measures?

• Increased savings income

• Higher asset valuation

• Decreased risk-taking

• Lower house prices

Why is it important to monitor the side effects of low interest rates?

• To ensure they do not outweigh the benefits

• To increase job creation

• To reduce credit conditions

• To decrease wage income

What did the Governing Council introduce regarding excess reserves?

• A new tax policy

• A new regime for remunerating excess reserves

• A new savings plan

• A new interest rate policy

How can fiscal policy be effective when interest rates are low?

• By lowering interest rates further

• By decreasing price pressures

• By supporting growth momentum

• By reducing productivity

What is one outcome of effective fiscal policy in the euro area?

• Reduced economic potential

• Lower interest rates

• Intensified price pressures

• Decreased growth momentum