scholarly journals The Impact of the European Central Bank’s Interest Rates on Investments in the Euro Area

2017 ◽  
Vol 291 (5) ◽  
pp. 51-72
Author(s):  
Joanna Stawska ◽  
Katarzyna Miszczyńska
Keyword(s):  
Interest Rates ◽  
Euro Area ◽  
European Central ◽  
The Impact

scholarly journals Monetary Policy Surprises over Time

2018 ◽  
Vol 08 (01) ◽  
pp. 1840002 ◽  
Author(s):  
Marcello Pericoli ◽  
Giovanni Veronese
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Interest Rates ◽  
Euro Area ◽  
Yield Curve ◽  
Sovereign Spreads ◽  
Definition Of ◽  
Term Premia ◽  
The Impact ◽  
Over Time

We document how the impact of monetary surprises on euro-area and US financial markets has changed from 1999 to date. We use a definition of monetary policy surprises, which singles out movements in the long-end of the yield curve — rather than those changing nearby futures on the central bank reference rates. By focusing only on this component of monetary policy, our results are more comparable over time. We find a hump-shaped response of the yield curve to monetary policy surprises, both in the pre-crisis period and since 2013. During the crisis years, Fed path-surprises, largely through their effect on term premia, account for the impact on interest rates, which is found to be increasing in tenor. In the euro area, the path-surprises reflect the shifts in sovereign spreads, and have a large impact on the entire constellation of interest rates, exchange rates and equity markets.

Low Interest Rates do they Revise Household Saving Motives in the Euro Area?

e-Finanse ◽  
2016 ◽  
Vol 12 (1) ◽  
pp. 43-56
Author(s):  
Katarzyna Kochaniak
Keyword(s):  
Interest Rates ◽  
Monetary Union ◽  
Euro Area ◽  
Union Member ◽  
Household Saving ◽  
Low Interest Rates ◽  
The Impact

AbstractThis paper presents the impact of decreasing MFI interest rates on household deposits and saving goals in 12 Monetary Union member countries in the years 2009-2015. It analyses tendencies in household deposits (overnight, with agreed maturity and redeemable at notice), and attempts to link them with certain household saving motives (target, retirement and precautionary). The paper identifies those deposit categories which appeared as sensitive to declining interest rates and indicates the Eurozone countries whose populations are expected to revise their savings plans. Precise implications are drawn for target saving motives of households in Austria, Cyprus and Malta. However, in the case of two other motives, the analysis does not conclude on the impact of decreasing MFI interest rates.

scholarly journals THE IMPACT OF THE MONETARY - FISCAL POLICY MIX ON INVESTMENTS OF EURO AREA COUNTRIES IN THE CONTEXT OF THE FINANCIAL CRISIS

2012 ◽  
Vol 8 (1) ◽  
pp. 228-236
Author(s):  
Joanna Stawska
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Financial Crisis ◽  
Interest Rates ◽  
Euro Area ◽  
Debt Crisis ◽  
Policy Mix ◽  
Monetary Authorities ◽  
Recent Financial Crisis ◽  
The Impact

The study presents the impact of monetary-fiscal policy mix on economic growth, mainly for the investments of euro area in financial crisis. Fiscal policy and monetary policy play an important role in the economy, influencing each other and on a number of economic variables as well. In the face of the recent financial crisis, which turned into a debt crisis, fiscal and monetary authorities have been working together to revive economic activity. There was a significant economic impact on the level of government investments. The central bank kept interest rates at very low levels and used nonstandard instruments of monetary policy. Fiscal authorities have increased government spending to stimulate investment and economic recovery. The paper concludes that the management of the fiscal and monetary authorities in a crisis situation has been modified compared to the period before the crisis, when the coordination of these policies was clearly weaker.

scholarly journals MONETARY POLICY IN CRISIS

2020 ◽  
Author(s):  
Yuriy Nikolayev ◽  
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Financial Performance ◽  
Interest Rates ◽  
Euro Area ◽  
Debt Crisis ◽  
Emerging Market ◽  
Quantitative Easing ◽  
Bank Of Japan ◽  
The Impact

The article is devoted to the study of conditions of application and influence of non-traditional monetary policy of central banks of developed countries on national economies and economies of emerging market countries. Based on critical analysis and systematization of basic research on the analysis of non-traditional monetary policy and its impact on the economies of different countries, it is substantiated that non-traditional monetary policy is a set of measures aimed at restoring the transmission mechanism and eliminating financial market imbalances. The main tools of non-traditional monetary policy are - previous management, quantitative easing; credit easing; negative interest rates, qualitative mitigation. Relevant areas of research on the financial performance of economies were also justified, as monetary policy directly affects interest rates, money supply, exchange rates, availability of credit, and through the financial sector to other sectors of the economy. During the aggravation of the economic and debt crisis, which had a negative impact on the Eurozone countries, investors' interest in CEE countries increased due to higher interest rates and the opportunity to make more profits. The study of the impact of the ECB's monetary policy on the financial indicators of Central and Eastern Europe revealed that the ECB's unconventional policy, including quantitative easing aimed at lowering long-term interest rates, affected the yield on government bonds of almost all EU countries, not only member states. euro area, which generally declined after 2014. Non-traditional monetary policy and an increase in the ECB's balance sheet also affect investment flows to CEE countries, but are mainly debt instruments in both direct and portfolio investment. The opposite situation is observed in the Eurozone countries with a high debt burden, especially in Greece and Italy. Despite the fact that the ECB's policy has led the euro area countries with a high level of debt to reduce the debt-to-GDP ratio, there is a tendency to increase the share of public debt payments to GDP. In this situation, the ECB simply cannot significantly change the purpose of its monetary policy, because any, even small, increase in the discount rate will lead to a new debt crisis in the Eurozone with its epicenter in Italy and Greece. The study of the impact of non-traditional policies of the Bank of Japan, the Fed and the ECB on the economy of Ukraine confirms the hypothesis that the actions of the ECB have the greatest impact on the financial performance of Ukraine. The analysis shows the impact of non-traditional monetary policy on the exchange rate of the Ukrainian hryvnia to the euro, US dollar and Japanese yen, but it was not significant. This is due to the fact that monetary policy in Ukraine only in 2015 actually moved from a fixed exchange rate to a floating exchange rate and began to apply inflation targeting. Announcements of non-traditional monetary policy have also affected government bond yields and stock indices, but the Ukrainian stock market is underdeveloped and has little effect. The main influence was the first programs of non-traditional monetary policy of the ECB, the USA and the Bank of Japan. In times when non-traditional measures were just being introduced and difficult to regulate and predict. Thus, it was proved that, on the one hand, unconventional monetary policy can stimulate economic growth, and on the other hand, create significant risks for further monetary policy opportunities to counter future crises.

scholarly journals The Normalization of the European Central Bank’s Monetary Policy from an Austrian Perspective

2018 ◽  
pp. 359-371
Author(s):  
Leef H. Dierks
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Euro Area ◽  
Quantitative Easing ◽  
Fixed Income ◽  
Fixed Income Securities ◽  
Market Prices ◽  
European Central ◽  
The Us ◽  
Low Interest Rates

After several years of historically low interest rates and quantitative easing, the European Central Bank (ECB) has finally started wind-ing down its ultra-accommodative monetary policy in late 2018. Among the first steps tapering its asset purchase programme (APP), which foresees monthly purchases of up to €30bn per month until September 2018 — «or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of infla-tion consistent with its inflation aim» (ECB, 2018a). By then, pur-chases of euro area fixed income securities on behalf of the ECB will have mounted to as much as €2,550bn or almost 90% of euro area GDP (€2,834bn in market prices in Q4 2017, the latest date for which data were available (ECB, 2018b)). Further, according to market esti-mates, the first hike of the main refinancing rate, which was slashed to 0% in March 2016, could emerge in Q1 2019, thereby following a tightening of the monetary policy the US Federal Reserve (FED) had already started in December 2015 (FED, 2015).

scholarly journals TESTING THE HOMOGENEOUS INTEREST RATES ASSUMPTION BY PRINCIPAL COMPONENT ANALYSIS: THE EURO AREA CASE

Ekonomika ◽  
2010 ◽  
Vol 89 (3) ◽  
pp. 30-39
Author(s):  
Jerzy Stelmach
Keyword(s):  
Principal Component Analysis ◽  
Interest Rates ◽  
Euro Area ◽  
Model Building ◽  
Yield Curve ◽  
Principal Component ◽  
Component Analysis ◽  
Applied Model ◽  
Analysis Technique ◽  
The Impact

Although there are many different interest rates in the economy, in theoretical and applied model building these distinctions are usually ignored by assuming that there is only one, “true” interest rate. Hence, the aim of this article is twofold. First, we empirically examine whether such assumption is plausible for the Euro area yield curve data. Second, using different time spans we try to assess the impact of the financial crisis on the validity of this assumption. For both purposes, the principal component analysis technique will be employed.

scholarly journals The Impact of Monetary Policies on the Sustainable Economic and Financial Development in the Euro Area Countries

2020 ◽  
Vol 12 (22) ◽  
pp. 9367
Author(s):  
Dana Kiseľáková ◽  
Paulina Filip ◽  
Erika Onuferová ◽  
Tomáš Valentiny
Keyword(s):  
Financial Markets ◽  
Financial Development ◽  
Euro Area ◽  
Quantitative Easing ◽  
Government Bond ◽  
Bond Yields ◽  
Monetary Policies ◽  
Goods And Services ◽  
European Central ◽  
The Impact

One of the responses of the monetary policies of central banks to the sustainable development on financial markets, which also affected other markets and economic growth, is the role of non-standard monetary policies, referred to as quantitative easing in the form of Asset Purchase Programme. In this paper, the following main research problem was addressed: How can the Asset Purchase Programme help the European Central Bank fulfill its mandate of supervising the financial stability and financial development? Based on this, we formulated the main objective: to identify the impact of monetary policies on the dynamics of financial markets development, labor markets, and the markets for goods and services. As part of the applied methodology, the impact of the quantitative easing on the government bond yields curve was based on an indirect assessment using the seemingly unrelated regression model, considering the use of parameters from the functional benchmark form. Through the vector error correction model, another additional impact of the application of the monetary policy mechanisms on selected indicators of the considered markets was identified. The relationship between financial markets and economic growth was determined on the basis of the two-stage least square model using endogeneity control instruments. Applying the changes identified by the above models allowed us to determine the expected change in the rate of growth of the aggregate output of the euro area countries. Based on our results, we found out that Asset Purchase Programme had an impact on the growth of government bond yields issued by euro area countries, on lowering the risk rate on corporate bond markets, and increasing the nominal value of shares. In addition, growth in inflation and a decline in interest rates were affected. Finally, the European Central Bank (ECB)’s non-standard monetary policies have positively affected and stimulated the labor market and development in goods and services markets, referred to the sustainable financial development.

The Second Regime

2021 ◽  
pp. 255-321
Author(s):  
Massimo Rostagno ◽  
Carlo Altavilla ◽  
Giacomo Carboni ◽  
Wolfgang Lemke ◽  
Roberto Motto ◽  
...  
Keyword(s):  
Lower Bound ◽  
Central Bank ◽  
Interest Rates ◽  
Euro Area ◽  
European Central Bank ◽  
Banking Sector ◽  
Zero Lower Bound ◽  
Demand Shocks ◽  
European Central

That the euro area economy had switched over into the second regime described in Chapter 3 became more evident in the last phase of the crisis. In this chapter, we describe the landscape facing the ECB in 2013 and 2014, with disinflationary demand shocks replacing inflationary cost-push shocks as the dominant force in the economy. With conventional policy unavailable, we outline the series of unconventional policies launched by the European Central Bank (ECB) to avert a multi-year depression and the deflation scenario that would have accompanied it. We chart the evolution from a policy of ‘separation’ to one of ‘combination’, with different policies seen as mutually reinforcing in fighting deflation risks. We illuminate how the ECB responded to key obstacles such as breaking through the zero lower bound (ZLB) on interest rates and implementing liquidity policies in a deleveraging banking sector.

scholarly journals The Interaction between American and European IRS Interest Rates

2018 ◽  
Vol 65 (1) ◽  
pp. 81-96
Author(s):  
Giovanni Verga ◽  
Federica Trani ◽  
Nicoleta Vasilcovschi
Keyword(s):  
Interest Rates ◽  
European Central Bank ◽  
Quantitative Easing ◽  
European Central ◽  
Term Structures ◽  
The Us ◽  
Short And Long Term ◽  
Internal And External Factors ◽  
The Impact

Abstract European interest rates movements are affected by various internal and external factors. This paper studies the link between European and American short- and long-term interest rates. In particular, we consider the forward interest rates coming from euro and dollar IRS term structures. The econometric techniques employed are co-integration, Granger-causality, OLS and GMM. Our results indicate that European remote settlement forward and long-term interest rates are primarily driven by US rates and confirm that the causality acts mainly from the US to the Eurozone. This was true even during the recent periods of European Central Bank quantitative easing. These factors weaken the ECB’s ability to intervene. In fact, we found the impact of American monetary policy on long-term interest rates to be also relevant for European bonds.

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