ECB’s Mersch: As conditions normalize, it is unlikely that unconventional policies will remain necessary

The European Central Bank (ECB) Governing Council member Yves Mersch crossed the wires last minutes, via Reuters, speaking on speech entitled "Central banking in times of technological progress" at Bank Negara, Malaysia.

Key Headlines:

As conditions normalize, it is unlikely that unconventional policies will remain necessary 

“The first important consideration for monetary policy relates not to any particular technology, but to the overall rate of technological progress. As the technological frontier shifts outwards, and that knowledge diffuses across the economy, overall productivity increases. That increased productivity affects the rate of return on investment and hence the level of real equilibrium interest rates.”

“Since monetary policy aims to vary short-term real rates around that equilibrium to meet our price stability mandate, changes in the overall rate of technological progress affect the interest rates central banks set. As such, policymakers need to adjust policy settings to adapt to changes in the real economy.”