ECB's Stance on Neutral Interest Rate

The European Central Bank (ECB) has recently confirmed its estimation for the neutral interest rate, maintaining it between 1.75% and 2.25%. This announcement comes as part of the ECB's latest bulletin, highlighting the bank's ongoing assessment of economic conditions and policy implications.

Challenges in Utilizing the Neutral Rate

Despite the clarity on the rate's range, the ECB has expressed concerns regarding the practical application of the neutral rate in monetary policy decisions. The bank cites 'multiple types of uncertainty' and the predominant focus on short-term interest rates as significant obstacles. This acknowledgment underscores the complexity of economic forecasting and the inherent challenges in policy formulation.