Anmerkungen zur Zinspolitik des Euroraums. Some short remarks about the European interest rate policy

Abstract

In modern monetary policy nearly every central bank has an output driven task to fulfil. This could be price stability or the attainment of a stable inflation rate. In order to establish whether the monetary policy has reached its goals, it is possible to use monetary rules ex post as a benchmark. For this we will use the Taylor rule and interest rate to describe the European interest rate policy from 1999 to 2009. The main result is that from 2000 till 2008 the Taylor interest rate is much higher than its benchmarks EONIA and EURIBOR. Only for the year 1999 a neutral interest rate emerges. Furthermore the paper shows that the European interest rate policy missed its Taylor interest rate benchmark every time except 1999. So it is possible to state that the European interest rate policy was too expansive.