Friday, 26 March 2010: 09:20
The use of monetary policy as a way of affecting economy by a central bank is one of the most frequently discussed moves of the state’s economic policy. This may prove significance of this instrument for stabilization activities. On the other hand, however, there are many premises indicating a limited effect of the monetary policy on real economic processes. Scepticism concerning the causative role of monetary policy regulation results from both doctrinal premises (classical dichotomy, liquidity trap) and an observation of real sector’ reaction to the central bank decisions. The latest example of a poor reaction of the real sphere to the central bank`s policy is a policy of cheap money accomplished by ECB as a reaction on financial crisis which has been developing since mid-2007. Despite gradual reduction of interest rate to an unprecedentedly low level of 1 % a strong decline in production growth, investment, consumption or quickly growing unemployment could not be evaded.
Data/Methods
Critical analyzes of ECB monetary policy, expecially policy focused on overcoming economic crisis. Statistical analyzes and evaluation of means applied by ECB to support economic growth processes in Eurozone countries, based on Eurostat, OECD and national data.
Expected results
Analyses should contribute to better understanding relations between application of monetary policy tools and functionning of real sphere of the economy.
Key words: monetary policy, neutral inflation, ECB monetary target, economic success indicator, economic growth, Not Decelerating Economic Growth Rate of Inflation (NDEGRI).