FRANKFURT (MNI) – One of the lessons from the crisis is that
monetary policy should be more symmetrical, European Central Bank Vice
President Lucas Papademos said Friday.
Monetary policy should also be set over a longer-term horizon, he
urged in concluding remarks at a symposium held in his honor.
Although the crisis has “strengthened” the idea that monetary
policy should “lean against the wind”, monetary policy should not be
“overburdened,” he argued. Furthermore, a monetary policy that leans
against the wind is hard to implement, he cautioned.
“Monetary policy should be conducted in what should be called a
symmetric manner over the financial cycle,” he said, elaborating that
policy can be more restrictive during a financial market boom and eased
when markets are in a weak state.
Nevertheless, keeping the main goal of price stability in mind,
“the use of the monetary policy instrument for leaning against the wind
should not be overburdened.” Policymakers should avoid “getting too
activist in monetary policy.”
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
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