Central banks should be independent not only of political pressure but also of short-term pressure, such as the perception of inflation by financial markets, said ECB spokesman Francois Villeroy. World central banks are facing increasing pressure from politicians on both sides of the Atlantic to ease monetary policy in line with their plans. At the same time, bond yields have recently decreased amid weak economic data, which forced central banks to take radical new stimulus measures to keep inflationary expectations from falling.
"We take into account market characteristics but we should not depend on the market; this means that one should not rely solely on inflationary expectations in the market, "said Villeroy. A key indicator of the long-term expectations of financial markets regarding inflation in the Eurozone recently fell to 1.1%. Despite the fact that it has risen to 1.3% since then, this is not only well below the inflation target of the ECB, close to 2%, but less than when the Central Bank launched its bond purchase program in 2015. Villeroy said he regretted the need to remind the importance of the independence of the Central Bank, which is the foundation of modern monetary policy and is increasingly being attacked by politicians.