According to media reports, European Central Bank President Christine Lagarde wanted the ECB Board to institutionalize the PEPP (Pandemic Emergency Purchasing Program, the main QE mechanism at present in the Eurozone,) through a structural vehicle, but her proposal was voted down. At the same time, two board members voted against the new forward guidance, of a “symmetrical” 2% inflation target. The latter includes a shift in the internal factionalization, with Belgian central bank governor Pierre Wunsch turning from a dove into a hawk. Together with Wunsch, Bundesbank President Jens Weidmann is said to have voted against it (but this is no news).
Some observers commented that the PEPP destiny is bound to the COVID-19 pandemic. Lagarde must hope that the pandemic continues, in order to justify a renewal of the PEPP beyond March 2022.
Bloomberg has published a chart showing real interest rates in the U.S., as a product of nominal zero interest rates and CPI inflation. This makes it a 5-plus negative rate.
