Monetary Policy in Europe—Boredom Suspended

By Ajai Chopra

Mervyn King, the Bank of England governor, once quipped that central bankers aim to keep monetary policy “boring”—a dull exercise in maintaining low and stable inflation. Recent months have seen quite the opposite.

Battling a sharp fall in inflation, central banks around the globe have slashed interest rates, often to close to zero. Several have also made headlines by adopting unconventional policies, including “quantitative easing” at the Bank of England (BoE) and “enhanced credit support” at the European Central Bank (ECB).


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