Monetary policy of ECB and FED during COVID outbreak

The two central banks faced the pandemic with a completely different approach. The European Central Bank (ECB) has increased funding and set up emergency financial assistance with the ultimate goal of boosting market liquidity, as opposed to the US Federal Reserve, which has taken a different approach by lowering interest rates. cash flow in the market but with rising inflation. As far as the banking sector is concerned, both central banks have taken measures to stimulate programs and financing, as well as to supervise them, with the auditing authorities playing a key role in monitoring liquidity and market equilibrium. In terms of the big picture, the Fed decided to follow a more innovative course with facilities and support for the flow of credit, in contrast to the ECB, which followed a more ordinary course, usually increasing the asset purchase program.

As a measure of comparison, we will take the inflation rate as it is an indicator that reflects the stability of the economy, being a tool of the central banks based on the policy and the support measures they have taken. The smooth course of EU inflation without much fluctuation in contrast to that of the US, indicates a stable economic situation without the outcome of abrupt changes. The Fed's primary goal was to increase inflation through interest rate cuts. It seems that the rapidly desired increase has led to an undesirable result compared to the relatively smooth increase achieved by the European Central Bank through the support packages it received.

USA inflation rate

EU inflation rate