ECB’s Makhlouf: Full Effect of Monetary Policy Yet to Be Seen

23 November 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Thursday said that there were lagged effects of monetary policy that had not yet materialised.

In remarks at the release of the latest Irish Financial Stability Review, a text of which was posted to the website of the Central Bank of Ireland, which he heads, Makhlouf said that ‘[w]e have not yet seen the full extent of the lagged effect of monetary policy actions on borrower finances or economic demand.’

‘Our assessment of the financial stability outlook continues to be shaped by the ongoing adjustment of the global economy to higher interest rates’, he said, adding that despite having declined, inflation remained far from the ECB's target.

Global markets and the global economy remained vulnerable to volatility and further shocks, he said.

‘Geopolitical tensions, signs of fragmentation of the global economy and extreme weather events are three potential sources of future shocks with consequences for policy. Against this backdrop, it is imperative that we maintain resilience while we have scope to do so’, he said.