The European Central Bank's invisible hand

Article Abstract:

The European Central Bank (ECB) has not officially begun operating yet, but is already clearly playing a role in monetary policy decisions. National governments acknowledge that the shift towards the ECB must be gradual, and this is already prompting a steady convergence in interest rates. This will not necessarily be associated with any monetary tightening for Europe as a whole. Indeed, the weighted average level of interest rates in the European Union could remain exactly the same after the single currency is implemented in 1999.

Administration of General Economic Programs, Intnl Economic Policy, Planning, International economic relations, European Central Bank, European Monetary System

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Central bank doves in the ascendancy

Article Abstract:

There are mixed views on the issue of whether the leading central banks should now be considering reducing interest rates. In the case of the UK, it can be argued that base rates should have been raised more rapidly in 1997 to put consumers under more pressure. Now, developments in the UK will depend largely on what happens to interest rates in other countries. It is possible that central bankers will soon begin to feel that it would be advisable to ease monetary policy in a pre-emptive way.

Analysis, Monetary policy

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