ECB’s de Cos: Globalisation Has Been Disinflationary in Advanced Economies Like Europe

9 February 2023

By David Barwick – FRANKFURT (Econostream) – The globalisation of the last decades as had a disinflationary impact on the euro area and, to a small extent, limited regional inflation’s sensitivity to domestic influences, European Central Bank Governing Council member Pablo Hernández de Cos said Thursday.

In a speech in London, de Cos, who heads Banco de España, avoided current monetary policy, and said that globalisation’s influence on monetary policy might have been via its impact on inflation, policy transmission and the natural rate of interest.

‘All in all, the main conclusion from current research is that, overall, the development of globalisation over the past few decades has led to disinflationary pressures in advanced economies, including the euro area’, he said.

‘It has also increased the transmission of foreign shocks and contributed to a lower sensitivity of inflation to domestic factors’, he continued. ‘However, these effects are found to be quantitatively small.’