The launching of a new central bank and a new currency is accompanied by uncertainty. The associated risk premium in the interest rate can be kept down by choosing an appropriate strategy and suitable top executives. The financial markets will keep a critical eye on the ECB right from the start. The initial monetary policy course thus takes on crucial importance.
But central banks can also play their part. This is why the decline in the natural real interest rate continues to be a central topic in our ECB strategy review. The review was postponed due to the pandemic and is now set to conclude in the second half of 2021. Our reaction function will likely evolve on the basis of this review exercise.