Study by: Austrian Institute of Economic Research – Hertie School gGmbH – Queen Mary University of London – German Institute for Economic Research
Online since: 14.07.2022 0:00
Amidst an already heightened inflation environment, the repercussions of the war in Ukraine resemble a macroeconomic supply-side
shock which puts monetary policy in a challenging situation. The ECB faces a difficult trade-off and needs to find the right
balance between dampening inflation and sustaining economic growth. Our empirical estimates suggest that the ECB is presently
not overly loose relative to its historical monetary policy record and that current inflation cannot be easily tamed by monetary
policy alone.