>> GROUP: Shadow ECB Council / EZB-Schattenrat  Jan Mallien

Jan Mallien: Shadow ECB Council members argue that it is premature to undertake another round of Targeted Longer-Term Refinancing Operations (TLTROs). Some would support such multi-year loans at a later stage to buffer against a drop in financing – while others oppose them in principle. The members would continue to link reinvestments to the capital key of the central bank but keep as much flexibility as possible by doing that.

Regarding the reinvestment policy for maturing bonds, the members would continue to link reinvestments to the ECB’s capital key but with maximum flexibility. A new key for subscription to the ECB’s capital will apply from January 1, with 16 central banks having a higher share than before and 12 having a lower share. Most members want the reinvestments to be neutral in terms of the maturity structure for now. They see no need to shift purchases towards the long end, at least for the moment.

Compared to three months ago, members of the ECB Shadow Council revised up their inflation forecast to 1.8 percent from 1.7 percent for 2018. Their forecast for 2019 was unchanged at 1.6 percent. The Shadow Council revised down its mean forecast for this year’s GDP growth to 1.9 percent from 2.1 percent, below the ECB’s staff projections from September. Members revised down also their 2019 and 2020 forecasts.

More information on the views of the Shadow ECB Council, including members' individual rate recommendations, is available in the download document.
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