Confidence Beyond Debt: The Role of Monetary Policy
Eight months have passed since the ECB started its own quantitative easing (QE) program, and almost everyone in Europe seems to agree with Mario Draghi that ‘QE has been a success’. But is such enthusiasm warranted? Let’s take a look at the data. The obvious starting place is the inflation rate. As is well known, the ECB’s mandate only foresees a single measurable objective—maintaining the inflation rate ‘below, but close to, 2 per cent’—and it is thus logical to judge the central bank’s actions first and foremost according to this parameter (as narrow as it may be), especially since one of the stated aims of the ECB’s QE program is to bring the inflation rate back towards the 2% target.