Strasbourg (Brussels Morning Newspaper) – MEPs in the EU Parliament plenary have asked the European Central Bank (ECB) to assess the effect of global conflicts on price stability.
For the first time, the European Parliament particularly requested the ECB to assess how war and conflict can impact price stability. MEPs, in a debate, expressed that they want the ECB to do more to control inflation and to ensure that any rollout of a digital euro takes citizen problems on board.
Lawmakers in the EU Parliament are worried regarding the “historically and persistently” high levels of inflation, claiming price gains hit those with lower incomes the hardest. They noted that the ECB was mistaken in believing inflation would only be momentary and that economic forecasting measures ought to be enhanced to allow for better policymaking.
Moreover, MEPs, for the first time, asked the ECB to prepare a Geopolitics plan 2025-2030 to comprehend better the effects of war and conflict on price stability.
European Parliament also asked the ECB to assess how climate change impacts its ability to support price stability. MEPs urged that price stability remains the ECB’s primary goal and warned that over-reaching on secondary goals “touches on the independence of the ECB.”
What lessons has the ECB learned from past economic crises?
Earlier developments in the assessment of global conflicts on price stability by the European Central Bank include monetary policy strategies and responses to economic crises.
The ECB’s objective is to maintain price stability, defined by a year-on-year rate of increase in the Harmonised Index of Consumer Prices (HICP) below 2% over the medium term while keeping inflation “below but close to 2%”. The ECB took non-standard measures, such as quantitative easing and negative interest rates, during the Financial Crisis of 2008 to counter deflation risks and stabilise financial markets.
