The ECB is definitely overdue about starting normalization of monetary policy. They might be concerned about financial market stability, where the key concern appears to be Italy /Moritz Kraemer, FT, Opinion Market Insights, April 25 2022/.

However, the key to why the ECB does not follow the US Federal Reserve or the Bank of England is the built-in division of the structure of the Eurozone. The Northern and the Southern parts have totally different stakes in the new stagflation-type decade. In booming times all these differences can be handled smoothly, in stormy times there are no good options for both.

ECB should not be afraid of following other global central banks in reshaping their monetary policies. In the meantime, they should also open new avenues for the Southern Belt via targeted credit lines in order to maintain GDP growth.

Economic growth can better support financial stability than super-loose interest rates.

Governor Matolcsy, MNB, the Central Bank of Hungary

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