Peter Praet Member of the Executive Board of the ECB The Eurozone s experience with unconventional Monetary Policy Monetary and Financial Policy Conference of the Money Macro and Finance (MMF) Research Group London, October 17
Global and EA PMI composite output (diffusion index; SA; monthly data) Global PMI Composite Global: 1999-17 average Global PMI ex. EA Composite EA PMI Composite 6 6 55 55 5 5 45 45 4 4 35 7 9 11 13 15 17 35 7 9 11 13 15 17 Sources: Markit, ECB staff calculations. Latest observation: August 17. Source: Markit. Latest observation: August 17. 17-1-
Industry.7.6.5.4.3..1. -44-39 -35-3 -6-1 -17-1 -8-3 1 6 1.4.3. Retail.6.5.4.3..1. -3-7 -3 - -17-13 -1-7 -3 4 7 1 Construction Business and consumer sentiment (relative frequency) Households.7.6.5.4.3..1-41 -37-34 -3-6 - -18-15 -11-7 -3 4.5.4.3..1 Services. -35-9 -3-18 -1-7 -1 4 1 16 1 7 3.1. -46-4 -37-3 -7 - -17-1 -7-3 7 1 17-1- 3 Source: European Commission. Note: Historical distribution of balances of opinion for five different sectors. Sample: January - September 17. Latest observation: September 17.
M3 and loan growth (annual percentage changes) Central bank balance sheets (Jan. 7 = 1) 14 M3 loans to the private sector 6 Eurosystem Federal Reserve 1 1 5 8 4 6 4 3-1 -4 7 9 11 13 15 17 7 9 11 13 15 17 Source: ECB. Latest observation: August 17. Sources: ECB and Federal Reserve. Latest observation: September 17. 17-1- 4
Bank loans to the private sector (annual percentage changes) DE ES EA 3 5 15 1 5-5 -1 3 5 7 9 11 13 15 17 Source: ECB. Latest observation: August 17. 17-1- 5
5. 4. 3.. 1.. -1. Rubric HICP inflation and HICP excluding food and energy (annual percentage changes) Risk neutral probability density function of euro area inflation over the next five years APP Announcement (1 Jan 15) 5 HICP HICP excl. food and energy Latest observation ( Sep 17) 4 3 1.5 1 1.1-1 7 9 11 13 15 17-3. -.5 -. -1.5-1. -.5..5 1. 1.5..5 3. Source: Eurostat. Latest observation: September 17 (flash estimate). 17-1- 6 Sources: Bloomberg, Reuters, and ECB calculations. Note: Density functions are computed from 5-year maturity zero-coupon inflation option floors under the assumption of risk neutrality. These risk neutral density functions may differ significantly from physical (or "true") probability distributions. Shaded areas indicate the probability mass assigned to an inflation rate below.% over the next 5 years. Latest observation: September 17.
Measures of underlying inflation (annual percentage changes) Components of HICP excluding food and energy (annual percentage changes, percentage point contributions) 3. HICP excluding food and energy HICP excluding food, energy, travel-related items and clothing Long-term average HICP excluding food and energy U Core Super-core. Clothing Travel Services excluding travel NEIG excluding clothing HICP excluding energy and food.5 1.5. 1. 1.5 1..5.5.. 1 11 1 13 14 15 16 17 Sources: Eurostat and ECB calculations. Note: The dynamic factor model (U Core) is based on the full 93 HICP items from each of 1 countries. Super-core is based only on those items in HICP excluding food and energy that are sensitive to slack as measured by the output gap. The range includes exclusion-based measures, trimmed means and a weighted median. Latest observation: August 17. 17-1- 7 -.5 1 11 1 13 14 15 16 17 Sources: Eurostat and ECB calculations. Latest observations: August 17.
Inflation in Services and Compensation per Employee in Services (annual percentage change) Wage Phillips curve (x-axis: percentage points; y-axis: annual percentage changes) 6 Q1-8 Q1 8 Q - 14 Q3 4. HICP services Compensation per employee 4. 14 Q4-17 Q1 17 Q - 19 Q3 Simple fitted Phillips curve 3.5 3.5 3..5. 1.5 1..5 Compensation per employee 3..5. 1.5 1..5. 7 9 11 13 15 17 Sources: Eurostat and ECB calculations. Note: The latest observations are 17 Q3 (latest data point refers to August 17) for HICP services, and 17Q for compensation per employee. 17-1- 8. 14 15 16 17 18 19 1 Broad unemployment rate Sources: Eurostat and ECB calculations. Note: Broad unemployment rate includes (i) total unemployed, (ii) underemployed part-time workers who currently have jobs, although not at the optimal weekly hours they would like, and (iii) inactive persons who are marginally attached to the labour market, as a percent of the labour force plus all marginally attached workers. The difference between the unemployment rate and the broad unemployment rate is assumed to decline at the same pace as observed in the past 6 quarters. The black line represents a simple fitted Phillips curve. Latest observation: 17Q1.
Implied unemployment gaps (percentage points) Unemployment rate Broad unemployment rate 1-1 - -3-4 -5-6 6 8 1 1 14 16 Sources: Eurostat (EU LFS). Note: Seasonally adjusted data. Broad unemployment rate includes (i) total unemployed, (ii) underemployed part-time workers who currently have jobs, although not at the optimal weekly hours they would like, and (iii) inactive persons who are marginally attached to the labour market, as a percent of the labour force plus all marginally attached workers. To obtain the implied unemployment gaps both unemployment rates are expressed as differences to their 6 average plus the 6 unemployment gap from the June 17 BMPE. Latest observation: 17Q for unemployment and 17Q1 for broad unemployment. 17-1- 9
Evolution of OIS forward curves (percentages per annum) Key financial indicators since June 14 and impact of policy measures (basis points and index points) 5 1 Aug 7 1 Apr 1 3 May 14 6 Sep 17 5 Policy measures: credit easing, APP, and DFR Change 5 Sep 17-4 Jun 14 5 4 4-5 -5 3 3 15-1 -1 1 1 1 5-15 -15-1 1 3 4 5 6 7 8 9 1 Forward start in years -1 - EA 1y yield OIS 1y yield OIS 1y yield NFC bond yield Bank bond yield - -5 Euro Stoxx Source: ECB. Latest observation: 6 September 17. Sources: Bloomberg, ECB, ECB calculations. Latest observation: 5 September 17. 17-1- 1
Expectations of future short-term rate throughout periods of non-standard measures (percentages per annum).75.5 Monetary policy package.5. -.5 -.5 -.75 13 14 15 16 17 18 19 Sources: Bloomberg, ECB calculations. Notes: Evolution of the OIS forward curve from pre-nirp (black-dotted lines) to post-nirp (red-dotted lines) period. The dashed red line shows the latest observation. Latest observation: 7 September 17. 17-1- 11