EPISODE · Apr 29, 2022 · 17 MIN
Two Challenges for the ECB: A Faster Green Transition & International Decoupling
from The Week That Was in Europe · host Klaus Adam & Dirk Schumacher
We discuss how ECB policy will be affected by #1 the likely acceleration of the Green transition, triggered by the Russian invasion & high prices for fossil fuel, and #2 the international economic decoupling between Western economies and Russia/China, as triggered by the same geopolitical tensions. We argue that both developments will require an increase in real interest rates in the short term, even if they may lower them in the long-term.
What this episode covers
We discuss how ECB policy will be affected by #1 the likely acceleration of the Green transition, triggered by the Russian invasion & high prices for fossil fuel, and #2 the international economic decoupling between Western economies and Russia/China, as triggered by the same geopolitical tensions. We argue that both developments will require an increase in real interest rates in the short term, even if they may lower them in the long-term.
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Two Challenges for the ECB: A Faster Green Transition & International Decoupling
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