ECB’s Müller: We Do Not Intend to Hesitate Too Much in Shaping Monetary Policy

11 March 2022

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Madis Müller on Friday said that the ECB would not let its monetary policy decision-making be put on hold for too long.

In a blog post on the website of the Estonian central bank, which he heads, Müller said that ‘previous assumptions are no longer valid - the primary impact of the war will be reflected in even higher prices for gas, oil and other raw materials, and the rapid rise in prices will take longer.’

However, Russia’s unprovoked assault on neighbouring Ukraine would not bring the euro area recovery to a halt, he noted.

The Governing Council’s decision on Thursday reflects the fact that ‘there is little scope for central banks to intervene prudently when price increases are caused by geopolitics, soaring energy prices and problems in supply chains’, he wrote.

While the decision ‘also creates an opportunity to raise interest rates earlier than previously planned … it is certainly too early to allow anything concrete in this regard’, he said. What the ECB will do going forward will ‘depend on the actual economic development in the coming months and quarters.’

‘Most importantly, however, in the current context, the Governing Council's clear message is that we do not intend to hesitate too much in shaping monetary policy, and when circumstances change, we will always react and always contribute to maintaining a stable economic environment’, he said. ‘For central bankers, this means, above all, that we base our decisions on the pace and future prospects of price increases, as our main goal is to ensure that the purchasing power of the euro is maintained and that prices rise slowly in the long run.’