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Question On Growth Forecasts Returning To Historical Pace

ECB
  • Q: You're forecasting growth returning to the historical pace, why? Re central bank losses as rates rise, do you think it's sustainable for Eurosystem nat'l CBs to run with negative equity?
  • A: We believe that after a number of phenomenon have faded, growth will return. One is supply chain bottlenecks; one question mark is what happens to China; another is the strength of the labour market. Clearly a question mark about how the energy market will pan out. But all in all, our GDP forecasts to 1.8-1.9% come after shallow recession we forecast.
  • Some nat'l central banks have already communicated to their parliaments/stakeholders to indicate losses. Each is going to have to look at their balance sheet and operate according to their legal framework and governance. So I don't have a general framework that would apply to all of them. When you look at history, central banks can operate despite being in a loss position, and some have operated with negative equity as well.
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