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The Governor's blog

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The Governor's Blog aims to share, in an above all instructive manner, useful knowledge in relation to the monetary policy of the Eurosystem, of which the BCL is an integral part. Beyond that, it serves to explain more generally the BCL's European, international and national missions, and to take up positions expressed by the Governor. Finally, it will also present the work (reports, working papers, published articles, etc.) carried out within or by the BCL.

logo_BCL_Blog_Gouveror EN_logo overview


18.07.2022 - Blog post by Gaston Reinesch, Governor of the BCL
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19/ essai d'Économie Politique

A partially updated version of my « Essai d’Économie Politique - Division du travail, Spécialisation, Échanges, Marchés, État, Droit et Monnaie » dated 15 July 2022 is now available on the BCL website.

Download the file

29.04.2022 - Blog post by Gaston Reinesch, Governor of the BCL
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18/ The April 2022 ECB Governing Council monetary policy decisions: Incoming data reinforcing expectations of monetary policy normalisation

In December 2021 the Governing Council assessed that the progress on economic recovery and towards its medium-term inflation target permitted a step-by-step reduction in the pace of its net asset purchases and decided to discontinue net asset purchases under the Pandemic Emergency Purchase Programme (PEPP) at the end of March 2022. (...)

25.03.2022 - Blog post by Gaston Reinesch, Governor of the BCL
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17/ THE MARCH 2022 ECB GOVERNING COUNCIL MONETARY POLICY DECISIONS: REASSESSING THE INFLATION OUTLOOK AND RECALIBRATING MONETARY POLICY NORMALISATION 

In December 2021 the Governing Council assessed that the progress on economic recovery and towards its medium-term inflation target permitted a step-by-step reduction in the pace of its asset purchases. (...)

28.02.2022 - Blog post by Gaston Reinesch, Governor of the BCL
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16/ IMF’s Global Housing Watch DATA

The IMF’s Global Housing Watch constitutes a useful complement to the information figuring in my blog article “Residential real estate prices in Luxembourg” issued on 21 January 2022. (...)

11.02.2022 - Blog post by Gaston Reinesch, Governor of the BCL
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15/ THE FEBRUARY 2022 GOVERNING COUNCIL: MONETARY POLICY DECISIONS CONFIRMED, MONETARY POLICY STATEMENT RECALIBRATED

On February 3, 2022 the Governing Council confirmed (see the February 2022 monetary policy decisions) the decisions taken at its monetary policy meeting last December (see the December 2021 monetary policy decisions). (...)

21.01.2022 - Blog post by Gaston Reinesch, Governor of the BCL
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14/ Residential real estate prices in Luxembourg

The very rapid rise in residential real estate (RRE) prices in Luxembourg has warranted concern already for a very long time. In nominal terms, RRE prices in Luxembourg have increased on average by 7.5% since 2000 and by 9.7% over the last five years. The corresponding growth rates for the euro area as a whole were lower, at 3.4% and 4.9%, respectively. The continued increases in property prices and mortgage lending in Luxembourg have led to a rising level of household indebtedness. As a result, the ratio of household debt to disposable income more than doubled since 2000 and increased by 10 percentage points over the last five years. (...)
10.12.2021 - Blog post by Gaston Reinesch, Governor of the BCL
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13/ Public sector asset purchases, including of Luxembourg government bonds by BCL, under the PSPP and the PEPP

Summary

In previous blog articles we explained the main conventional and unconventional Eurosystem monetary policy tools from a policy perspective.

This article (with cut-off date on 1 December 2021) starts with a brief overview of the past public sector asset purchase programmes and provides more specific information on the implementation of the ongoing public sector asset purchase programme (PSPP), which represents the largest part of the extended asset purchase programme (APP), and the pandemic emergency purchase programme (PEPP). It also provides a short description of the Luxembourg government bond market and its key characteristics.

29.11.2021 - Blog post by Gaston Reinesch, Governor of the BCL
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12/ BCL opinion on the draft 2022 budget and the draft 2021-2025 multiannual programming law

Summary

The BCL has finalised its Opinion on the draft budget 2022 and the draft multi-annual programming law 2021-2025.
The Opinion was presented this morning to the Committee on Finance and Budget (COFIBU).
The slides (FR only) contain the main points developed in the Opinion.
The BCL Opinion (FR only) can be consulted on the BCL website.

24.11.2021 - Blog post by Gaston Reinesch, Governor of the BCL
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11/ THE NEW MONETARY POLICY STRATEGY OF THE EUROSYSTEM - PART 3

Introduction

This blog is the third and final part of a series of articles on the Eurosystem’s monetary policy strategy review launched in January 2020 and concluded in July 2021. It reviews the outcomes of the review in relation to a) the medium-term orientation of monetary policy, b) the monetary policy instruments, c) the new integrated analytical framework, d) the enhanced regular proportionality assessment and e) communication.

11.11.2021 - Blog post by Gaston Reinesch, Governor of the BCL
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10/ THE NEW MONETARY POLICY STRATEGY OF THE EUROSYSTEM - PART 2

Introduction

This blog is the second part of a series of articles on the Eurosystem’s monetary policy strategy review launched in January 2020 and concluded in July 2021. This blog article describes the outcomes of the review in relation to a) the Harmonised index of consumer prices (HICP) as the appropriate price measure for monetary policy purposes, b) the role of owner-occupied housing costs and c) climate change.

 

06.08.2021 - Blog post by Gaston Reinesch, Governor of the BCL
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9/ THE NEW MONETARY POLICY STRATEGY OF THE EUROSYSTEM

Introduction

Based on a thorough monetary policy strategy review launched in January 2020, on July 7, 2021 the ECB’s Governing Council decided on a new monetary policy strategy, announced on July 8, 2021. This blog article reviews the motivation for the monetary policy strategy review by the Eurosystem and one of its key outcomes, the medium-term inflation target. Other elements of the new strategy will be the subject of forthcoming articles.

 

05.08.2021 - Blog post by Gaston Reinesch, Governor of the BCL
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8/ INTEREST RATE BENCHMARK REFORM

Introduction

This article analyses the importance of money market reference rates from a double perspective. On the one hand, its objective is to make the public aware of the different reference rates in the money market and their great impact on capital markets and the real economy. On the other hand, this article sheds light on global reference rate reforms undertaken over the last few years. Thereby, it raises awareness of the reform outcomes and the need for adaption by market practitioners in the very near future.

 

29.07.2021 - Blog post by Gaston Reinesch, Governor of the BCL

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7/ essai d'Économie Politique

Summary

A partially updated version of my « Essai d’Économie Politique - Division du travail, Spécialisation, Échanges, Marchés, État, Droit et Monnaie » dated 4 July 2021 is now available on the BCL website.

Download the file

 

15.07.2021 - Blog post by Gaston Reinesch, Governor of the BCL

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6/ recent inflation developments

Summary

The recent months saw a substantial increase in measured headline inflation in the euro area. This article takes a succinct look at recent inflation developments, both for the euro area and Luxembourg.

14.07.2021 - Blog post by Gaston Reinesch, Governor of the BCL

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5/ Eurosytem launches digital euro project

Summary

The Governing Council of the European Central Bank (ECB) has decided on 14 July to launch the investigation phase of a digital euro project.

Gréng Luucht fir de Projet vum digitalen Euro - BCL Governor's interview with RTL Radio Lëtzebuerg

31.05.2021 - Blog post by Gaston Reinesch, Governor of the BCL

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4/ THE EXCEPTIONAL MONETARY POLICY RESPONSE TO THE EXCEPTIONAL COVID-19 PANDEMIC

Summary

As an immediate response to the pandemic and its implications for economic and financial conditions the Governing Council launched several additional monetary policy measures. This article briefly describes the main measures taken in the aftermath of the pandemic.

20.05.2021 - Blog post by Gaston Reinesch, Governor of the BCL

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3/ UNCONVENTIONAL MONETARY POLICY TOOLS ADOPTED BEFORE 2020

Summary

The previous blog article discussed the conventional monetary policy tools. This article provides an overview of the main unconventional monetary policy measures adopted by the Eurosystem between the global financial crisis of 2007-2008 and the outbreak of the COVID-19 pandemic in 2020 with focus on tools that are currently in operation.

 

06.04.2021 - Blog post by Gaston Reinesch, Governor of the BCL

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2/ An overview of the main Eurosystem's monetary policy instruments in place

Summary

This is the first of three articles describing the instruments through which the Eurosystem implements monetary policy decisions.
This post recapitulates the conventional monetary policy tools, which were the main instruments used by the Eurosystem before the global financial crisis of 2007-2008.

19.02.2021 - Blog post by Gaston Reinesch, Governor of the BCL

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1/ How does the Governing Council take monetary policy decisions?                       

Summary

This blog post gives an overview on the decision making process of the Governing Council and its communication aspects.