How the ECB can help reduce energy prices on the long run

How the ECB can help reduce energy prices on the long run

The combination of higher inflation and the still too slow green transition creates a dilemma for the European Central Bank because taming down inflation using its traditional interest rate policy would effectively make green energy investments costlier. To avoid such counter-productive outcomes, the ECB needs to signal clearly that any effort to fight inflation will also maintain favorable funding conditions for spending or investments that contribute to a successful energy transition.

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