Phil Lane, the Prophet?

• Author: Lane, Philip

Shortly before Christmas, the European Central Bank published an analysis by seven of its economists about the last twenty years of ECB monetary policy. The study is a "working paper" of almost 350 pages entitled, "A Tale of Two Decades: The ECB's Monetary Policy at 20."

The report concludes that in the absence of enhanced forms of forward guidance, the large asset purchase program, and targeted long-term loans to banks, eurozone GDP would have been at least 2.7 percent lower at the end of 2018. For the period from 2015 to 2018, inflation would have been one-third of a percentage point weaker on average.

Frankfort insiders diplomatically describe the report's conclusions as at or beyond the upper limits of...