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Patrick Artus, chief strategist at Natixis, notes that  if monetary policy had been more expansionary from 2008 to 2013, more restrictive since 2014 and above all since 2017, the ECB would currently have some leeway in the event of an economic slowdown.

Key quotes

“So we have the impression that the ECB has incurred a delay that it has been unable to make up for.”

“As the ECB did not use the years of good growth (since 2014, and even more in 2017-2018) to normalise its interest rates, it currently has no room for manoeuvre at a time when the economy will slow down.”

“The ECB has never been able to make up for the delay incurred, which means that quantitative easing did not start until 2015.”

“One explanation is linked to the oil price: its sharp rise in 2007-2008 and then from 2010, drove up euro-zone unit labour costs and inflation.”