The Russian invasion of Ukraine is not only a military and geopolitical turning point. It is also changing the economic situation. This affects both the short-term economic trend and the medium-term prospects for growth and prosperity.
The European Central Bank (ECB) is coming under increasing pressure. It wants to achieve its goal of long-term price stability with an inflation rate of below, but close to, 2 percent for the euro area. At the same time, it is concerned about the weak economic environment. Given how low interest rates already are, the ECB seems to have exhausted its options. What strategy will the ECB follow now? In the United States, the distinction between monetary and fiscal policy already seems to be blurring.