Central Banks

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Yves Mersch, senior member of the Executive Board of the ECB on Monday warned that asset prices are currently at very elevated levels. This comes at a time near all time highs in many global stock markets despite elvated risk.

ECB Mersch

Image: ECB Governor Mersch

Mersch says the risk of a correction is increasing adding that is preferable for monetary policy to incorporate financial stability concerns into deliberations.

Last week the ECB Governing Council’s policy decision was highlighted bythe announcement of the first appraisal of its inflation goal since 2003. The bank also added new challenges such as climate change and digital currencies. The past few years have been dominated by U.S.-China trade tensions easing and Brexit which have calmed down, at least in theory.

Mersch added there may be a significant gap between what households perceive to be the increase in their cost of living and what is measured by the HICP Incorporating owner-occupied housing in the reference rate for inflation for monetary policy would provide a clearer signal for monetaty policy to lean against housing price booms.

Source: Reuters

From the TradersCommunity News Desk

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