ECB’s Vasle: The Very Fact of a New Tool Supports Monetary Policy Normalisation
22 July 2022
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Boštjan Vasle on Friday said that the preservation of uniform monetary policy transmission was necessary to achieve price stability and that the mere existence of the ECB’s new anti-fragmentation tool would support policy normalisation.
In a statement issued in his name by the Bank of Slovenia, which he heads, Vasle said that the 50bp rate hike decided yesterday ‘follows from intensified inflationary pressures and a higher inflation outlook.’
‘Continued normalisation of monetary policy will be appropriate in the future and the exit from the negative interest rate environment allows us to move to deciding on further interest rate changes on an ongoing basis’, he said. ‘These will depend on current developments and the analysis presented at each Governing Council meeting.’
Higher key ECB interest rates mean government borrowing costs will also rise, he said. The new Transmission Protection Instrument ‘is intended to maintain a uniform and homogeneous transmission of monetary policy across the entire euro area, which is a prerequisite for achieving the inflation target’, he said.
‘The very fact that there is a new instrument supports the normalisation of monetary policy’, he said.