- Phasing out of liquidity support will continue
- Decisions will be gradual, consistent with improvement in financial markets
- Crisis not over, situation in some markets remains challenging
- Central banks with several goals may overburden monetary policy
Lots to chew over here from the ECB chief economist. He continues to talk exit strategy but that seems unrealistic while Irish, Portuguese and Spanish banks continue to tap ECB liquidity for the bilk of their funding.
He takes a shot at the Fed’s dual mandate, saying it overburdens monetary policy. He is wading into an interesting debate that is just beginning in the US. There has been a growing chorus in recent days from Republican members of Congress to strip the Fed of its full-employment mandate (a relatively recent Carter-era invention) and return the Fed’s goal to merely assuring price stability.
