Navigating neutrality: ECB policy amid heightened uncertainty

Michael Weber

No 113, SAFE White Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: This paper assesses the European Central Bank (ECB)'s monetary policy stance as of June 2025, analysing its evolving interest rate path, balance sheet developments, and communication strategy. It highlights the transition toward a neutral policy rate, ongoing quantitative tightening, persistent inflation dispersion, and increasing macroeconomic uncertainty. The analysis concludes that while inflation is converging toward target, elevated uncertainty, and divergence between interest rate policy and balance sheet reduction demand cautious calibration and transparent communication. This document was provided/prepared by the Economic Governance and EMU Scrutiny Unit at the request of the ECON Committee of the European Parliament.

Keywords: ECB; Monetary Policy; Inflation; Neutral Policy Rate (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewh:319903

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