The German Establishment’s Reversal-of-Field on Monetary Policy and the ECB

In my inbox…

Then:

The design of the European Central Bank must follow the design of the Bundesbank. That means, first, goal independence: the ECB must have a fixed objective,and that objective should be an inflation rate near but less than 2%/year.

Now:

So what if inflation is far below its goal of near-but-less-than-2%/year? We like 0%/year now! Forget goal independence!

Then:

The design of the European Central Bank must follow the design of the Bundesbank. That means, second, instrument independence: the ECB as a technocratic institution must not have its elbow joggled by those less-expert in their understanding of monetary policy.

Now:

On interest rates, you ran out of room to cut and into the ZLB while the economy was still depressed. So you want to try this QE idea now? Why? that sounds very strange to us! Forget goal independence!

Then:

The design of the European Central Bank must follow the design of the Bundesbank. That means, third, following fixed, settled, and well thought-out rules rather than making it up on the fly.

Now:

Thank goodness our monetary policy is carried out via rules not discretion!”