Statement of September 12, 2019
DIW president Marcel Fratzscher comments today's announcements by the ECB as follows:
The ECB has caught many off-guard and has made an unavoidable, yet remarkably determined U-turn. The ECB has sent a strong signal that it takes its mandate seriously and will not be pressured by politicians, but defend its independence. The renewal of the QE program and the promise to keep rates low until the price stability mandate is fulfilled will imply many more years of low rates. The decision takes the pressure off the future ECB President Christine Lagarde to act swiftly. The German government should take the ECB’s request for more expansionary fiscal policy seriously. The ECB needs the support of fiscal policy for its monetary policy to be effective. Germany does not want to help – for instance by raising public investment and reducing its current account surplus - while other countries cannot. With its excessively high savings Germany shares responsibility for the low interest rates. Not the ECB but governments and regulators are responsible for tackling the negative side effects of monetary policy.