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The economy is thus caught in a trap, forcing the ECB to engage in ever more radical monetary policy measures.
Draghi said: "In order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively".
Fiscal and monetary policy measures over the past year have increased the power of the state, not diminished it".
In addition, he said: "The governing council may consider undertaking further non-standard monetary policy measures according to what is required to repair monetary policy transmission".
The Fed's forecast for 2002 suggests that fiscal and monetary policy measures may already have helped the economy to turn the corner.
"The BOJ believes that its monetary policy measures and the government's initiatives will produce synergy effects on the economy," the bank said.
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He backed the ECB's view that OMT lay within its mandate, finding that it was "an unconventional monetary policy measure".
In a forthcoming paper*, Shigenori Shiratsuka, one of the BoJ's senior economists, re-examines Japan's experience of QE in light of the extraordinary monetary-policy measures taken by central banks since last year (the BoJ among them).
Instead, leaders emphasized the need for a new regulatory body, to be chaired by the European Central Bank, and the need for additional monetary-policy measures — which, for the 16 members of the euro zone, would again be the remit of the ECB.
"PROBABLY the most successful monetary-policy measure undertaken in recent times".
Hans-Werner Sinn, boss of Munich's Ifo Institute and an economist, echoes Mr Seehofer: the ECB has "cut interest rates by too much"; and it is not authorised to buy bonds "as this is a fiscal and not a monetary-policy measure.
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financial policy measures
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economic policy measures
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exchange rate policy measures
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